Despite the rip-roaring rally in stocks, Brexit had a significant effect on the wealthiest third of US incomes as UMich Consumer Expectations (i.e. “Hope”) tumbled to its lowest since September 2014.
“Hope” vs the ‘reality’ of stocks…
As Bloomberg reports, Consumer confidence in the U.S. dropped in July as U.K.’s vote to leave the European Union flustered high-income earners.
The University of Michigan’s preliminary sentiment index fell to 89.5, a three-month low, from 93.5 in June. The median projection in a Bloomberg survey called for no change.
The Brexit vote’s outcome caused global equity markets to briefly slump, giving Americans in the upper third of the income scale reason to shudder over their finances. The subsequent rebound in stocks means confidence probably will soon regain some of its lost ground, according to Richard Curtin, the Michigan survey’s director.
“Prior to the Brexit vote, virtually no consumer thought the issue would have the slightest impact on the U.S. economy,” Curtin said in a statement. “Following the Brexit vote, it was mentioned by record numbers of consumers, especially high-income consumers.”
The current conditions index, which measures Americans’ perceptions of their personal finances, declined to 108.7 from 110.8 in the prior month.
“While stock prices quickly rebounded, an underlying sense of uncertainty about global prospects as well as for the domestic economy have not faded,” Curtin said in the statement.
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