InvestNow News 16th August – Legg Mason – Will Business and Consumer Confidence Converge?

5th August 2019

Global consumer and business confidence have diverged—a trend that started in 2018, but is otherwise pretty rare, only occurring two other times over the last 30+ years. These two sentiment factors previously diverged in the periods after the East Asian and European sovereign debt but as the chart below shows, these divergences in sentiment don’t last.

While the global economy hasn’t recently experienced a huge shock to the system like it did in ’98 or ’10, the slowdown in Chinese economic growth has weighed on business confidence. We have seen other related measures such as capital expenditures (capex), Purchasing Manager Indices (PMIs), inventories, and export orders all weaken as well. So what’s driving this dichotomy between businesses and consumers?

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