The Piton Investment Team does not have a crystal ball or magic formula, but we do try to share some of the tools that we do have that give us degrees of confidence in our expectations. One of those tools is investment strategist Jim Paulsen’s “Main Street Meter” (MSM). The basic idea is to chart the ratio between unemployment and consumer confidence, by dividing the Consumer Confidence Index by the Bureau of Labor Statistics’ unemployment rate. We will leave it to others to debate what the data in the Main Street Meter foretell for the economy. We focus on how equities perform after the MSM reaches certain levels (the chart models one way that the MSM has historically tracked to the S&P 500). At the end of 2025, for example, the MSM was rather low, about in its bottom 25th percentile (tracking from 1955 to 2025). That can sound discouraging, but historically, it seems that returns in the S&P 500 in the next year or three years after the time when the MSM is this low, rank among the strongest returns compared to years when MSM stands at higher percentiles. This is a rough, broad measure but it is one of a number of measures that we have analyzed which suggest to us that bullish times can be ahead.
For an overview by Jim Paulsen of his Main Street Meter, click here.
Index Benchmarks presented within this report may not reflect factors relevant for your portfolio or your unique risks, goals or investment objectives. Past performance of an index is not an indication or guarantee of future results. It is not possible to invest directly in an index.
The S&P 500® Index, or the Standard & Poor’s 500® Index, is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies.
The Consumer Confidence Index (CCI) is a survey administered by the Conference Board. The CCI measures what consumers are feeling about their expected financial situation, whether that’s optimistic or pessimistic.
The Main Street Meter (MSM) is a financial indicator developed by Jim Paulsen that acts as a gauge for future stock market returns. It is defined as the ratio of consumer confidence divided by the labor unemployment rate.
The Bureau of Labor Statistics (BLS) is an agency of the United States Department of Labor. It is the principal fact-finding agency in the broad field of labor economics and statistics and serves as part of the U.S. Federal Statistical System. BLS collects, calculates, analyzes, and publishes data essential to the public, employers, researchers, and government organizations.
The Michigan Consumer Sentiment Index (MCSI) is a monthly survey of consumer confidence levels in the United States conducted by the University of Michigan.
The statements in this blog are not historical facts and may be forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause the outcome to be materially different. In addition, words such as “will,” “should,” “may,” “anticipate,” “believe,” “expect” and “intend” indicate a forward-looking statement, although not all forward-looking statements include these words.