By William Shanklin
The Conference Board Consumer Confidence Index is a closely watched monthly indicator of Americans’ spending intentions and the overall direction of the economy. It is derived from a representative survey of U.S. households that account for about 70% of domestic outlays.
The Consumer Confidence Index was up ever so slightly for August, and therefore “consumers remain apprehensive about the future.” Because pari-mutuel wagering on horse racing is a decidedly discretionary expenditure, the Consumer Confidence Index is a short-term guide to prospects for this leisure endeavor.
Two less-publicized indexes are the Spectrum (Group) Millionaire Investor Confidence Index (SMICM) and the Spectrum Affluent Investor Confidence Index (SAICI). The SAICI is based on monthly interviews with financial decision-makers in households having more than $500,000 in investable assets, while the SMICM is based on interviews with the wealthiest subset of the households.
The SMICM, in particular, is a resource for forming data-based expectations about the level of bloodstock prices in the short term, both at auction and privately.
For the past 12 months the Spectrum Millionaire Investor Confidence Index has been neutral. Then, in August, the SMICM experienced its largest downturn since June 2009.
The Spectrum Affluent Investor Confidence Index also fell in August, for its third straight monthly decrease. “The millionaires’ decline is particularly troubling since it suggests millionaires, typically more sophisticated than the broader affluent population, are reverting to a bearish frame of mind,” Spectrum officials said.
Affluent investors cited the following news stories as most affecting their economic outlook: the political environment (18%), unemployment (16%), and the economy (11%). By contrast, millionaires “were more focused on the political environment than the affluent, but less focused on unemployment.”
To what extent similar bargain-hunting by the wealthy is realized at the Keeneland September sale remains to be seen. Top-of-the-line bloodstock is likely to fetch lofty but considerably moderated prices compared with auctions held in better economic times. But barring something major, the indexes point in the near term to continued weakness in pari-mutuel wagering and a generally subdued market for bloodstock.
William Shanklin, a longtime contributor to The Blood-Horse, is the publisher of the Website horseracingbusiness.com