Federal Reserve Bank of Kansas City
Do Changes in the Stock Market Affect Consumer and Business Confidence?
I find that measures of consumer and business confidence respond to stock market surprises. My evidence points to a confidence channel from financial conditions to the real economy. By signaling strong future incomes and profits, high equity valuations boost consumer and business confidence, which in turn stimulates real spending today. These relationships highlight a risk that the recent stock market decline could sap confidence, with adverse effects on real activity.
Cite this item
Willem Van Zandweghe, "Do Changes in the Stock Market Affect Consumer and Business Confidence?"
, Federal Reserve Bank of Kansas City, Macro Bulletin, pages 1-3, number 00073, Jan 9 2019.
- G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
This item with handle RePEc:fip:fedkmb:00073
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