The FTSE 100’s sharp decline last week, leaving it 10% below its peak in April, certainly won’t lift consumers’ spirits but it is unlikely to be large enough to dissuade them from continuing to spend more either.
The relationship between equity prices and consumer confidence has been very weak recently, perhaps reflecting the declining proportion of households’ financial assets accounted for by shares. Movements in real earnings and house prices have been much more important determinants of consumer confidence than changes in equity prices. And the outlook for real earnings, and to a lesser extent house prices, remains positive.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services