Apr 28, 2021
“Animal spirits” is a term coined by the celebrated economist John Maynard Keynes, which describes the financial decision-making behaviors of people in times of uncertainty. The behavior of animal spirits has a clear relationship with consumer confidence. In today’s episode, Grant dives into how we can measure animal spirits and consumer confidence and what these concepts mean for the financial markets, our lifestyles, and portfolios.
[01:03] Background – Grant reviews how the term “animal spirits” was coined, the historical background of it, and what constitutes the concept of animal spirits.
[05:19] Consumer Confidence Index – How consumer confidence can be quantified with an index, how it reflects the economic impact of global events, and what it can tell us about the status of the economy.
[10:00] Mergers & Acquisitions – In the last few months, there’s been a big surge in mergers and acquisitions. Grant shares his thoughts on the reason for this surge and how this trend relates to animal spirits.
[15:52] Other Examples – Grant reviews some of the other trends in the economy that relates to animal spirits, such as non-fungible tokens and cryptocurrencies.
[18:15] Consumer Confidence and Predictions – High consumer confidence is a clear indicator of good economic growth. Grant shares his thoughts on what the current status of consumer confidence tells us about the next few months.
[22:22] Negative Possibilities – Grant shares his take on what challenges we may have to face if the economic rebound does not go as expected.
Resources:
Understanding the Consumer Confidence Index:
investopedia.com/insights/understanding-consumer-confidence-index
Animal Spirits:
investopedia.com/terms/a/animal-spirits.asp