US equity prices affect consumer and business confidence, researcher finds
Results highlight risks to macroeconomy of recent equity slump
US equity price changes can affect consumer and small business confidence, says Willem Van Zandweghe, assistant vice-president at the Federal Reserve Bank of Kansas.
“These relationships highlight a risk that the recent stock market decline could sap confidence, with adverse effects on real activity,” Van Zandweghe writes in a research paper.
To examine the relationships, Van Zandweghe compares the S&P 500 index against changes in the University of Michigan’s consumer sentiment index and the
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