Analysis: U.S. consumer stock market confidence has fallen to a record low, and risk aversion has risen

According to the Kobeissi Letter analysis, the latest survey from the University of Michigan shows that U.S. consumers are pessimistic about the stock market at an all-time high, with a record 12% of Americans believing that the stock market has no chance of rising in the next 12 months. This proportion has tripled in the past two months and surpassed the peak levels in 2022, 2009 and 2022 when the market bottoms were.
Meanwhile, 44.5 per cent of consumers expect the stock market to fall in the coming year, the highest level since 2022 and the second highest level in 14 years, in a rare state of extreme pessimism.
Analysts point to a combination of recession fears, inflationary pressures and unstable trade relations as the sharp drop in consumer confidence. Such pessimism could lead investors to pull money out of the equity market, weakening liquidity and shifting funds into defensive sectors or cash holdings, further exacerbating market volatility.