Latest Consumer Data Show Combination Of Optimism And Realism

The latest consumer data from the University of Michigan show an interesting divergence: Consumers are quite optimistic about the outlook for their personal finances but realistic about the outlook for economic growth. Consumers currently view their personal finances as the strongest in a decade but also anticipate that the growth rate will not be strong enough for a further drop in an already low unemployment rate. And just as many consumers believe the economy will slow in the near-term future as believe it will continue to grow.

These views help explain the stability of the research group’s signature Consumer Sentiment Index during the last nine months. The index fell only slightly in the final March reading, dropping to 91 from 91.7 at the end of February. This is down only slightly from a reading of 93 in March a year ago. The group’s Expectations Index also fell slightly in March versus February; it is down 4.5% from this time last year.

UM Surveys of Consumers Chief Economist Richard Curtin added that consumers are also realistic about the direction of gasoline prices, which have risen during the past 45 days. They expect them to continue to rise, but only modestly.

“What is surprising,” Curtin said, “is that the expectation of higher prices and higher unemployment has not caused an increase in uncertainty about personal financial prospects.” He said this may be a result of consumers believing any changes in price or employment trends will be minor.

This general consumer optimism continues to help fuel foodservice sales. In the monthly Consumer Spending Report survey on retail sales by Chain Store Guide, the CSG Restaurant Spending Index rose 0.4 point for April, ahead of the 12-month moving average of 0.3 point. This indicates consumers’ intent to increase their spending on restaurants this month.