The researchers at IAAI have forecast positive trends for both job creation and consumer confidence. Which,...

The researchers at IAAI have forecast positive trends for both job creation and consumer confidence. Which, if either, of these trends should have a positive effect on stock prices?

Expert Solution

A positive tendency in the job creation is a chief imeasure of increased economic activities. More jobs would probably produce more employment, which in turn would result in more expenditure, savings and investment. A positive prediction in job creation tendency and consumer confidence is good indicator for the firms and household of that economy. Hence, job creation is certainly correlated to earnings, expenditure, savings and investment which actually affect stock prices in a positive manner.

Consumer confidence has also same effect as job creation. Consumer confidence results to an increase in demand of goods and services by the individuals and to meet demand more production will be required. And thus, there is a growth in economic cycle because more investment to produce more products works as fuel. Hence, it is also positively correlated with stock prices.

Both job creation and consumer confidence has positive impact on stock prices.

jeff jeffy answered 2 years ago

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