Consumer Confidence Surges Post-Election
Consumer confidence rose sharply following the presidential election, according to both the University of Michigan’s Surveys of Consumers and The Conference Board. The UM’s Consumer Sentiment Index jumped 6.6 points from the final October reading to 93.8, with a significant number of responses after the election. The Conference Board’s Consumer Confidence Index jumped to 107.1 in November from 100.8 in October and is back to pre-recession levels. Both groups’ Expectations Indexes also surged.
“The initial reaction of consumers to Trump’s victory was to express greater optimism about their personal finances as well as improved prospects for the national economy,” the UM’s release stated. The research group noted that “more consumers expected their finances to improve during the year ahead than in any other survey during the past decade…. Those anticipated gains were among the households with incomes in the bottom third of the income distribution as well as among those in the top third.”
But UM’s Surveys of Consumers Chief Economist Richard Curtin also issued a caution. “No surge in economic expectations can long be sustained without actual improvements in economic conditions. Presidential honeymoons represent a period in which the promise of gains holds sway over actual economic conditions. Presidential honeymoons, however, can quickly end if they are unaccompanied by prospects that economic conditions will actually improve in the future.”