The June 2021 June consumer confidence index leaped to 127.3 from 117.2 in May, an over 8% increase month-over-month. We examine asset class and sector performance during the last period when consumer confidence reached these elevated, pre-pandemic levels.

The June 2021 June consumer confidence index leaped to 127.3 from 117.2 in May, an over 8% increase month-over-month. The index measures how optimistic or pessimistic consumers are about the state of the economy through spending habits. The benchmark value for the index in order to be viewed as positive is 100, the beginning value when the index began in 1985. The confidence index’s rally above the 120 level is the first time since February of 2020 when the index ended a 32-month consecutive period with a reading above 120. The June increase in consumer confidence also comes after an over 20% increase in March, which was the largest month-over-month increase since November of 2011.

Considering the rally above 120 by the consumer confidence index, we examined the broader asset class and sector performance during the periods within the last 10 years that the index has had monthly readings above 120.  From an asset class standpoint, international equities experience positive performance in March 2017, but for the preceding roughly three-year period beginning in July of 2017, domestic equities and fixed income were the only asset classes to outperform even our cash representative. Most notably, this period of high consumer confidence and positive performance by our domestic equity proxy encompasses a time in which domestic equities was the top-ranked asset class. From a sector view, technology and consumer discretionary exhibited the highest level of positive performance during March 2017 and from July 2017 to February 2020. It is worth noting that during that three-year period, 8 out of eleven sectors showed positive performance. The only sectors in negative territory over this time were energy, telecom, and materials.

While we have no way of knowing if consumer confidence will remain high for the foreseeable future – much less for the next 30+ months – we can gather from the performance table that technology and consumer discretionary may be the sectors to watch if consumer confidence is able to remain at elevated levels.