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The average American consumer thinks it’s unlikely the stock market will be higher 12 months from now.

Why it matters: Enthusiasm toward stocks is the kind of thing that inflates market bubbles that crash.

  • On the other hand, caution toward stocks often means prices have room to go higher as that caution is eventually proven unwarranted.

By the numbers: Each month since June 2013, the Federal Reserve Bank of New York has asked consumers: "What do you think is the percent chance that 12 months from now, on average, stock prices in the U.S. stock market will be higher than they are now?"

  • According to results released Monday, respondents in June said on average that there was a 40.2% likelihood that stocks would higher. That's down from 40.8% in May.
  • The only time this measure was above 50% was in April 2020, right after the S&P 500 crashed to a low on March 23.

Yes, but: Ritholtz Wealth Management’s director of research, Michael Batnick, says history favors the optimists.

  • "Going back to 1950, there was a 74.16% chance that the S&P 500 would be higher one year later," Batnick tells Axios.
  • "When the S&P 500 was at an all-time high, there was a 74.10% chance the market was higher one year later."

What they’re saying: "Consumer sentiment is vulnerable to news items that report negative projections," Oppenheimer strategist John Stoltzfus tells Axios.

The bottom line: Just because people believe the stock market is unlikely to produce a positive return doesn’t mean it won’t produce a positive return.

Go deeper

Consumer inflation expectations continue to rise

Data: New York Fed; Chart: Axios Visuals

Americans expect stuff to get a lot pricier.

Why it matters: Even though inflation may not actually rise to expected levels, the expectations alone can affect behavior.

Consumer prices posted modest increase in August

People walk outside a supermarket on the Upper West Side on September 5, 2021. Photo: Noam Galai/Getty Images

The core Consumer Price Index (CPI), which measures the price of goods and services excluding food and energy, increased 0.1% in August on a month-over-month basis.

The big picture: The core CPI numbers released Tuesday showed a smaller gain than the .3% increase economists were expecting. It was the smallest increase since February 2021.

Pelosi's back-to-school math problem

Illustration: Sarah Grillo/Axios

House Speaker Nancy Pelosi (D-Calif.) may need votes from an unlikely source — the Republican Party — if she hopes to pass the bipartisan infrastructure bill by next Monday, as she's promised Democratic centrists.

Why it matters: With at least 20 progressives threatening to vote against the $1.2 trillion bipartisan bill, centrist members are banking on more than 10 Republicans to approve the bill.

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