Economy
Year-End Consumer Sentiment Remains Solid, Building Hopes for Continuation Into 2020
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Consumer sentiment remained essentially unchanged last week despite an announced trade deal between the United States and China. The Morning Consult index of consumer sentiment ticked higher last week for its ninth consecutive week-over-week gain. The index score of 112.1 remains less than one point below its 52-week high of 112.6 posted in the last week of April.
The index is based on the firm’s daily survey of some 7,500 U.S. adults and is higher than it was at this time last year. The 52-week low of 104.5 was posted on January 21.
The gap between the index’s component scores widened slightly in the week ending December 8, with the future expectations score rising by 0.6 points to 112.6 and the current conditions score dipping by 0.4 points to 111.2.
According to Morning Consult, consumers were not immune to concerns about new tariffs on $156 billion in Chinese imports. Those concerns were outweighed by positive news: “[C]onsumer confidence has gradually, but consistently rebounded since the end of August in response to the abatement of recession fears, the initial announcement of the phase one deal on 10/11/19, and better than expected October and November jobs reports.”
The firm went on: “The fact that there hasn’t been a significant jump in confidence indicates that consumers have ‘priced in’ the good news over time.”
Morning Consult asks the same questions of its survey respondents as does the University of Michigan’s twice-monthly Survey of Consumers. The difference is in the frequency and method of the survey. The Michigan sentiment index is based on 600 telephone interviews with U.S. adults, while Morning Consult’s results are based on an ongoing survey comprising 7,500 daily interviews and 210,000 monthly interviews, all conducted online.
The Morning Consult survey breaks down the data it collects by some key demographic groups. Here are some of the results of that breakdown.
Households with income of less than $50,000 annually posted an overall sentiment score of 106.5 last week, down 0.3 points from the previous week. Among households with income between $150,000 and $200,000, the overall score rose by 2.9 points to 127.9, and overall sentiment among households with incomes between $200,000 and $250,000 added 5.3 index points to post a score of 129.3. See what it takes to be considered rich in each state.
Among African Americans, overall sentiment fell by 0.6 points to 110.7, while rising by 0.2 points to 113.3 among Hispanics.
By industry sector, the leisure and hospitality industry posted the largest week-over-week drop, falling by 6.9 points to 112.4. Sentiment among retail trade workers remained flat at 118.6, while sentiment fell by 2.8 points in the educational services industry.
Top executives posted a 1.3-point gain in overall sentiment for a score of 123.0. Sentiment among production, operations or logistics businesses added 2.6 points last week to post an index score of 121.2.
Looking at responses to questions about current economic conditions, Americans employed in the real estate and transportation industries were considerably more optimistic than in the previous week, with index score gains of 6.2 points and 5.9 points, respectively.
Manufacturing workers’ view of the current economy rose by 2.2 points last week to 123.2, while workers in agriculture shaved 9.4 points from their index score, dropping it to 125.8.
Company executives are also slightly more downbeat about current conditions, lowering their index score by 0.4 points to 119.5, but still within a couple of points of the 12-month high.
When asked about 12-month expectations for their personal finances, Americans between the ages of 35 and 44 added 3.0 points to bring their index score to 140.3, closer to that of the 25- to 34-year-olds who posted a score of 145.3. These millennials are far more optimistic than boomers, who posted an index score of 108.5. See how much American life has changed in the past decade.
Looking ahead to 2020, Morning Consult commented, “The importance of the final days of the 2019 holiday shopping season serve as a precursor of what to expect in 2020. U.S. economic growth in 2020 depends on continued consumer spending, which depends in turn on strong job and wage growth and continued confidence. Consumer indicators are currently flashing green, but it’s unclear if the strength of the U.S. consumer and declining global uncertainty can entice businesses to increase investment and hiring, particularly during an election year.”
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