I really like this chart with its correlation. There are a few times when this correlation failed. The early 1980's was a great example. But, that's also when Reagonomics showed up in the world, and the government began to spend like there was no tomorrow. Personal consumption finally caught up a few years later. Also, during the mid-late 1990's there was another obvious push higher in equities when personal consumption failed to keep up. That would be the "new economy" and the dot com era when the way we function as human beings was forever to change, which was a justification for pushing equities up just because the company had a mere notion of going online. We all know how that turned out.
What I found interesting was that there were times when PCE led the equities markets, and other times when just the opposite happened. It got to the point where I was comparing data line for line to see which bottomed or topped out first. Inevitably, however, the S&P always seemed to win the race, meaning, once there was change in the economy, and the markets caught on, nothing got in the way of the equities markets from winning the race either up or down.
Now, let's look at the very end of the chart. The S&P is pushing slightly higher whereas the PCE is more or less meandering around towards nowhere. Well, perhaps lower. We're largely at an area where nothing is really clear. And that might be exactly why I'm getting so many emails asking which way. If I had to say, I'd say lower. That comes from the rate of growth in consumption -- which is leaning lower.