Economy Watch: Optimistic Reports About Economy Still the Norm

Both the Federal Reserve Bank of Philadelphia and the University of Michigan reported that continually strong economic conditions have consumers feeling confident.

Consumer Sentiment 0117The Federal Reserve Bank of Philadelphia’s December coincident indexes, which track all 50 states, increased in 41 states, decreased in two and remained stable in seven, the bank reported on Friday. Over the past three months, the indexes increased in 47 states, decreased in two, and remained stable in one.

On the whole, that’s a bit of good news after the tepid GDP growth report for the fourth quarter. The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each index are non-farm payroll employment; average hours worked in manufacturing; the unemployment rate; and wage and salary disbursements deflated by the consumer price index.

Also on Friday, the University of Michigan reported that its Index of Consumer Sentiment ended January at 98.5, up from a month ago, when it was 98.2. Consumers are still optimistic about the outlook for the economy, in other words. Optimism, should it be sustained, is an important factor driving consumer spending and thus the retail industry (unless consumers decide to spend more online, as they have been recently.)

Finally, the economic impact of the administration’s immigration policy since Friday so far is merely speculative, though tech companies are worrying publicly that the brainpower that tends to immigrate to the United States to work in the industry might start thinking twice about it. More immediately, the dollar, which has been puffing up in value against the euro and the yen and other currencies since the election, dropped a bit over the weekend on news of U.S. uncertainty.