Confidence is a powerful thing; when you got it, you got it, and there’s nothing that can get in your way.
(Today, we get a fresh reading on the confidence level of U.S. consumers in June.)
In sports, confidence means winning it all (just ask LeBron James); in the classroom, it means acing the exam. And in the world of economics and markets, it means having the guts to go for it and take risks, whether it’s laying down a six-figure down payment on a new house, $600 bucks on a new stainless steel dishwasher or $6 bucks on one of those high-end flavored coffees over ice.
And when it comes to consumer confidence, rising confidence can be a self-fulfilling prophecy. If a person lands a better job, he’s got more cash — and guts — to upgrade the house, plan a vacation or drop some extra coin on a hot stock. And that gets the economy going. It also boosts corporate earnings, which the stock market loves.
So it’s no wonder that Wall Street is starting to feel confident, too, confident in the fact that with job growth picking up, retail sales rebounding and other economic data points signaling better days ahead, U.S. consumers have to be feeling more and more confident as the dark days of the financial crisis grow farther away. The revival in confidence can be seen in growth projections for the U.S. economy in the second quarter, which Barclays has upped to 3.2%, up from 2.5% in early June.
That’s why today’s preliminary read on June consumer sentiment from the University of Michigan (9:55 a.m. ET) will be closely watched. Last month, confidence ticked lower after hitting its second-highest level since 2007 in April.
If the first read on consumer sentiment for June shows consumers flaunting a confident streak, Wall Street could bid prices higher as the recovery gains steam.