There’s an extreme divide in how Americans feel about the economy, and it’s a huge red flag to Wall Street that the next recession is near

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There’s an extreme divide in how Americans feel about the economy, and it’s a huge red flag to Wall Street that the next recession is near
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This extent of pessimism has heralded every recession since the 1970s.

There's a massive gulf between how Americans feel about the future of the economy and their assessment of present conditions.

Liz Ann Sonders, chief investment strategist at Charles Schwab, gave Business Insider an exclusive look at this dynamic, and what it means going forward.investors are constantly on the lookout for signs that corporate profits are in jeopardy. A recent trend among consumers has flagged to some Wall Streeters that their confidence is waning — even though it doesn't appear that way on the surface. After all, the Conference Board's consumer-confidence index rebounded in February after three straight monthly declines.

"Troughs in this spread have historically represented near-term recession warnings," Sonders told Business Insider.In a separate note, Sonders said it's impossible to know for sure whether this indicator has indeed bottomed. Also, it's just one of several indicators — both leading and lagging — that investors are keeping a close eye on.

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