U.S. households expect the stock market to go higher in the next 12 months even as their own finances deteriorate, according to a Federal Reserve Bank of New York survey.
Americans saw better than 50-50 odds of higher stock prices over the next year for the first time since data collection began in 2013, according to results of a monthly New York Fed consumer survey collected in April and published Monday. At the same time, expectations for growth in earnings, total household income and consumer spending all fell to the lowest levels in the survey's seven-year history.
The results highlight the disparate impact the coronavirus pandemic is having on the stock market and the labor market. The S&P 500 Index of shares in large U.S. companies has mostly stabilized about 14% below February's record high — thanks in part to the U.S. central bank's aggressive efforts to pump liquidity into financial markets — while more than 33 million Americans have filed claims for unemployment insurance benefits over the last seven weeks.
In the survey, nearly 32% of respondents said they expected their own financial situations to be worse a year from now, marking the highest level in seven years of data. In February, that number was just 10.5%.