The Week in Charts (5/19/23)” video by Charlie Bilello from Creative Planning, the discussion revolves around the current state of the stock market and the US consumer. The CAPE ratio, which measures stock market valuation based on current prices and average earnings over the past 10 years, is currently down from its 2021 peak but still above its historical average. This indicates that while returns may be lower than historical averages over the next 10 years, it’s impossible to predict short-term movements. The most significant factor for the US economy, according to Bilello, is the US consumer. Over the past two years, wages have not kept pace with inflation for 25 consecutive months, leading to a decline in consumer sentiment and spending. Consumer sentiment, as measured by the University of Michigan Consumer Sentiment Index, has been historically low, and retail sales have seen negative year-over-year growth when adjusted for inflation. This trend, if it continues, could potentially lead the US economy into a recession.
