Economy Watch: Consumers Start Off 2017 with Confidence

The post-election surge in optimism continues, according to the University of Michigan Survey of Consumers mid-January report.

By Dees Stribling, Contributing Editor

Source: University of Michigan Surveys of Consumers
Source: University of Michigan Surveys of Consumers

U.S. consumers continue to be more optimistic than they’ve been in years, according to the latest reading of the University of Michigan’s Consumer Sentiment Index, which was released just ahead of the Martin Luther King Jr. Day holiday. The index for mid-January came in at 98.1, down slightly from 98.2 at the end of December, but up from 98.0 at mid-month December. A year ago, the reading was 92.6, so consumers are quite confident compared to then.

The Current Conditions Index rose 0.6 points to reach its highest level since 2004, while the Expectations Index fell 0.6 points, which was neverthess just lower than its 2015 peak, which was the highest in 12 years. Such strong positive feelings might have had an impact on consumer spending last month, which was stronger than usual, even accounting for the holiday season.Survey of Consumers Chief Economist Richard Curtin noted that the post-election surge in optimism was accompanied by an unprecedented degree of both positive and negative concerns about the incoming administration that survey respondents mentioned when asked about economic news. From 1960 to 2000, references to government policies among respondents was fairly rare, but now it’s common.

Curtin didn’t speculate on why that might be, but did posit that consumers might calm down once the 2016 election is further behind the nation. Even so, “it should be noted that among the majority of consumers who referred to neither positive nor negative views on government, the Expectations Index was a strong 90.9, supporting a real consumption growth of 2.7 percent in 2017,” he said.