Nobel Prize-winning economist Robert Shiller reportedly sees worrying signs in the monthly sentiment survey at the Yale School of Management.
"I'm concerned. It's not just the one-year confidence, but it's also the valuation confidence" Shiller recently told CNBC.
"Most people are worried. It's the high price to earnings ratio — or I'd use the high CAPE ratio — so you have a weakening of optimism and you have a concern about overpricing," the Yale University economics professor said.
Shiller developed the cyclically adjusted price-earnings (CAPE) ratio market valuation measure, which is calculated using price divided by the index's average historical 10-year earnings, adjusted for inflation.
At the same time, individual investors are now the least bullish since the start of the Yale survey back in 2001, said Shiller, who also helped develop the widely-followed S&P/Case-Shiller Home Price Indices.
Shiller said he believes much of the current pricing has to do with the mentality of the "Trump boom" after President Donald Trump's victory in 2016.
"I think the strength of the Trump boom is still a factor, there's something psychological going on," said Shiller, who was awarded the Nobel Prize in Economic Sciences with Eugene Fama and Lars Peter Hansen in 2013.
"We're so preoccupied with other things — notably Donald Trump and the revolution that he might be making in taxes or other things — that might be affecting our thinking," said Shiller.
Shiller warned that the market would be obviously very disappointed if Trump's tax-reform plan would somehow fail ot win Congressional approval.
"We've already got a sense that it's more difficult than we thought with the inability to change the health care system. So people have already gotten a clue on that," he said. "The enthusiasm in the markets isn't just looking at tax rates. It's just a general level of sense that we have a government that supports capitalism and that will foster an atmosphere of entrepreneurship and business."
Meanwhile. another meaure of American economic attitude was much more optimistic.
Americans' confidence in the economy remained steady last week, holding at the highest level since mid-August and one of the highest levels in the past nine years.
Gallup's U.S. Economic Confidence Index averaged +7 for the week ending Nov. 12.
Amid a booming stock market and a falling unemployment rate, the index has now registered its strongest two-week performance since the second and third weeks of August, when confidence stood at +8 and +11, respectively.
In particular, the October jobs report, which the Labor Department released on Nov. 3, showed the unemployment rate falling to a 17-year low.
Last week's score also ranks among the highest weekly readings since 2008, with only 14 other weeks registering a higher level of confidence.
All 14 have occurred since Donald Trump won the 2016 presidential election. Before that event, economic confidence was negative throughout 2009-2016, save for a nine-week period at the beginning of 2015. Since then, the measure has been positive for all but two weeks.
Americans' confidence in the U.S. economy remained strong last week, at least by the standards of the past nine years. This most recent rally may be a reaction to the recent tide of good economic news, including the positive October jobs report.
And while major stock market indexes, such as the Dow Jones Industrial Average, registered their first weekly losses in nine weeks last week, they remain well above where they were one year ago.
(Newsmax wire services contributed to this report).
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