Consumer Sentiment Hovers Near Highest in 12 Years
Consumer confidence was little changed in January from its highest level since the start of 2004, showing Americans are still optimistic that fresh economic policies will spur growth.
The University of Michigan said Jan. 13 that its preliminary index of sentiment was 98.1, after 98.2 in December. The median projection in a Bloomberg News survey called for 98.5, with estimates ranging from 96 to 100.
The latest reading indicates sentiment remains strong after President-elect Donald Trump’s November victory, with Americans and businesses betting that tax cuts and looser regulation will help bring more opportunities for jobs and higher wages. At the same time, the survey showed a significant minority of respondents expected negative effects from the new administration’s policies, indicating a deep partisan divide over the outlook.
“These extreme differences would imply either strong growth or a recession in the year ahead,” Richard Curtin, director of the consumer survey, said in a statement. “Since neither is likely, one would anticipate that both extreme views will be tempered, with the relative movement dependent on changes during Trump’s first 100 days.”
Curtin said on a conference call that “actual changes in the economy” will have the most effect on sentiment. “We’re going to start to see either a positive or negative reaction after Trump has been in office for three or four months.”
The current conditions index, which measures Americans’ perceptions of their personal finances, increased to 112.5 from 111.9 in December.
The gauge of expectations six months from now declined to 88.9 from 89.5 in December that was the highest in almost two years.
Respondents expected the inflation rate in the next year will be 2.6%, compared with 2.2% in the December survey that was the lowest since September 2010. Over the next five to 10 years, they project a 2.5% rate of price growth, after a record-low 2.3% in the prior month.
