Consumer confidence has bounced back from the lows seen during the depths of coronavirus despair. Conversely, business confidence continues to descend.

Do businesses know something that consumers have yet to figure out? Possibly. For example, the jobs picture may be very slow to mend.

Consumers are also laboring to keep up with bill payments. What’s more, they are already leveraged to the hilt with non-housing debt.

If the previous recession is any guide, the next few years may witness a period of debt deleveraging by consumers. (See purple arrows below.)

Deleveraging would be a positive for household balance sheets. However, it would be a huge negative for businesses that generate revenue based largely upon household consumption.

Economic challenges notwithstanding, tech stock advocates have become exceptionally greedy. For example, precious few participants sought protection from a Nasdaq 100 downturn at the start of 2020. Going into the July 4th holiday? Same thing.

Greed’s comeback has been both epic and unimaginable. Then again, with the Federal Reserve pumping trillions of dollars into the financial system, many are choosing to speculate on everything from “stay-at-home” stocks to cybersecurity.


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