Consumer confidence matters.
Gas prices are rising again, and that’s bad news for just about everything else. The guys over at Horan Capital Advisors put together a few charts of the potential negative effects of high gas prices.
We see that as gas prices rise, consumer confidence falls.
Consumer confidence has a strong impact on retail sales. In this next chart gasoline prices lead retail sales by one month. It is apparent that a loss in consumer confidence as gas prices rise coincides with a loss in retail sales.
Declining consumer confidence yields weaker equity prices. This final chart indicates that the S&P 500 should follow consumer confidence down.