Americans are more worried than ever about losing their jobs, their household income and the equity in their homes, but one thing they are not worried about is the stock market.
The state of play: The Fed's latest survey of consumer expectations shows "a significant deterioration in households’ expectations regarding their labor market and financial situation, a decline seen across all age, education, and income groups," but respondents also reported an unprecedented spike in expectations for the stock market to rise.
Market analysts don't agree: Even in a best-case scenario in which coronavirus cases peak in the next week and the economy starts to reopen later this month, analysts at JPMorgan believe the losses in equity prices will only recover next year.
- “The U.S. will experience a slower rebound due to expected lingering damage to labor and credit markets. .. a significant wave of layoffs and business closures will continue to weigh on demand," Bruce Kasman, head of economic research at JPMorgan, said in a note to clients.
Of note: JPMorgan CEO Jamie Dimon warned, “At a minimum, we assume that [COVID-19] will include a bad recession combined with some kind of financial stress similar to the global financial crisis of 2008,” in his annual letter to shareholders.