Why Sentiment is a Poor Economic Indicator

Today’s Empire Fed index showed a very positive sentiment reading despite the economic data showing

Shipments down
Orders down
Unfilled Orders down
Delivery Time down
Inventories down
Number of Employees down
Avg Workweek down
Expected number of employees down

Nearly all the economic indicators in the report were down yet, sentiment was up!

The National Association of Homebuilders Index measuring the sentiment of homebuilders was released today and it rose to the highest level since 2006.

How people feel is often disconnected with reality. Hope springs eternal.

When a baseball manager asks a pitcher who is taking a shelling on the mound “how do you feel?” He doesn’t say “my slider ain’t working and I am getting hit bad” Instead he responds “I feel good coach”.

Or the conversation that the boxer has with his trainer when he returns to his corner after taking a beating. “How do you feel champ? The boxer doesn’t say “it feels like my nose is split open and my arms are heavy” Instead he responds “I feel good”

Sentiment readings along with the state of the stock and real estate markets are the unholy trinity of leading economic indicators.

In the fall of 1929 the real estate and stock markets were up and consumers felt great.

Get Free Updates From Smaulgld.com

Subscribe to Smaulgld.com and get the free In Case You Missed Itweekly email as well as updates and analysis on gold, silver, real estate and the economy.

Also get the free report “Twelve Key Differences Between Gold and Silver” when you subscribe.

Please visit the Smaulgld Store for a larger selection of recommended Kindles, books, music, movies and other items.

Or you can support Smaulgld.com by making all your Amazon purchases through the search widget below and by ordering your gold and silver by clicking on the JM bullion ads on the site:

Buy Gold and Silver

DISCLOSURE: Smaulgld provides the content on this site free of charge. If you purchase items though the links on this site, Smaulgld LLC. will be paid a commission. The prices charged are the same as they would be if you were to visit the sites directly. Please do your own research regarding the suitability of making purchases from the merchants featured on this site.

The content provided here is for informational purposes only. Making investment decisions based on information published by Smaulgld (SG), or any Internet site, is not a good idea. Accordingly, users agree to hold SG, its owner and affiliates, harmless for all information presented on the site. SG presents no warranties. SG is not responsible for any loss of data, financial loss, interruption in services, claims of libel, damages or loss from the use or inability to access SG, any linked content, or the reliance on any information on the site.

The information contained herein does not constitute investment advice and may be subject to correction, completion and amendment without notice. SG assumes no duty to make any such corrections or updates. As with all investments, there are associated risks and you could lose money investing. Prior to making any investment, a prospective investor should consult with its own investment, accounting, legal and tax advisers to evaluate independently the risks, consequences and suitability of that investment. SG disclaims any and all liability relating to any investor reliance on the accuracy of the information contained herein or relating to any omissions or errors and as such disclaims any and all losses that may result.

Post Navigation