NY Fed: Investors Sour on Stocks Despite Low Unemployment, Brisk Growth

NY Fed: Investors Sour on Stocks Despite Low Unemployment, Brisk Growth

Americans were less upbeat about Wall Street even as the U.S. unemployment rate hovered near an 18-year low and the economy recorded its fastest growth pace in four years in the second quarter, a New York Federal Reserve survey released on Monday showed.

The regional Fed’s barometer on consumers’ perceived chances of U.S. stock prices increasing in 12 months fell to 40.3 percent in July, which is the lowest level since October 2016 when it was 37.64 percent.

Their view on stocks softened despite the benchmark S&P 500 index racking up 3.6 percent in total return last month on strong company earnings and solid economic data.

In general, U.S. consumers were less optimistic about household finances a year from now.

“One-year-ahead expectations of changes in the household’s financial situation deteriorated slightly and are now comparable to the values in July 2017,” the N.Y. Fed wrote on the latest survey results.

While consumers believed household income would grow, their expectations for more family spending fell to 3.2 percent in July. They expected home prices, gasoline and medical costs to soften, while they reckoned food prices would rise.

It is unclear what caused consumers to turn less confident about their finances.

They maintained a solid view on the jobs market, although they downgraded the prospects for paycheck growth to 2.4 percent from 2.7 percent.

The survey’s gauge on expectations for taxes grew for a fifth straight month to 2.2 percent since it hit a series low of 1.5 percent in February.

Last December, Washington enacted the biggest rewrite of the federal tax code in 30 years which included a massive tax cut.

The tax overhaul has resulted in a surging federal debt load to finance the government’s budget gap.

Consumer expectations for government debt growth increased to 6.9 percent in July from 6.6 percent in June and compared with 4.9 percent from a year ago.

The New York Fed survey is done by a third party that taps a rotating panel of about 1,200 household heads. 

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