Consumer Sentiment Near Year-to-Date Peak

By Paul Ausick Updated Jan 12, 9:00AM EST · Published Aug 18, 11:05AM EDT

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Consumer Sentiment Near Year-to-Date Peak — © Thinkstock

The University of Michigan Consumer Sentiment Index jumped from a July reading of 83.4 to an August reading of 97.6, a 4.5% increase. Economists polled by Bloomberg had expected an August reading of 93.9.

The month-over-month consumer expectations subindex rose from 80.5 to 89.0 (up 10.6%) and the current conditions subindex slipped from 113.4 to 111.0 (down 2.1%).

Year over year, the consumer sentiment index is up 8.7%, the current conditions subindex is up 3.7% and the consumer expectations subindex is up 13.1%.

The survey’s chief economist, Richard Curtin, said:

Consumer confidence rose in the first half of August to its highest level since January due to a more positive outlook for the overall economy as well as more favorable personal financial prospects. The two component indices moved in opposite directions, with the Current Conditions Index falling slightly from its decade peak, and the Expectations Index posting a more substantial rebound. As with the overall Sentiment Index, the component indices nearly regained the peak levels recorded earlier in 2017. Too few interviews were conducted following Charlottesville to assess how much it will weaken consumers’ economic assessments. The fallout is likely to reverse the improvement in economic expectations recorded across all political affiliations in early August. Moreover, the Charlottesville aftermath is more likely to weaken the economic expectations of Republicans, since prospects for Trump’s economic policy agenda have diminished. Nonetheless, the partisan difference between the optimism of Republicans and the pessimism of Democrats is still likely to persist, with Independents remaining as the bellwether group. At this point, the data continue to indicate a gain of 2.4% in personal consumption expenditures in 2017.

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The sharp rise in expectations in this preliminary version of the survey could be dashed if the turmoil in the Trump administration continues. The White House has promised a tax reform proposal that many businesses and individuals are still counting on, but the increasing alienation between the president and the Senate threatens to derail the proposal. The hope is that the long-standing unifying principle of lower taxes that animates the Republican Party will patch up the current rancor between the president and the Senate.

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About the Author Paul Ausick →

Paul Ausick has been writing for a673b.bigscoots-temp.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.