US equity prices affect consumer and business confidence, researcher finds

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US equity price changes can affect consumer and small business confidence, says Willem Van Zandweghe, assistant vice-president at the Federal Reserve Bank of Kansas.

“These relationships highlight a risk that the recent stock market decline could sap confidence, with adverse effects on real activity,” Van Zandweghe writes in a research paper.

To examine the relationships, Van Zandweghe compares the S&P 500 index against changes in the University of Michigan’s consumer sentiment index and the

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