The Morning Consult index of consumer sentiment rose to 114.0 last week, for its eleventh consecutive week-over-week gain. This week’s score was the highest in two years, and the daily score also broke through the 115-barrier for the first time.
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 narrowed further in the week ending December 29, with the future expectations score rising by 0.7 points to 114.2 and the current conditions score rising by 2.3 points to 113.7.
According to Morning Consult, “From the consumer’s perspective, trade uncertainty has been particularly harmful when combined with fears of a recession, which are not on the horizon. As long as the U.S. and China sign a version of a deal that doesn’t throw markets into a panic, consumers are unlikely to react to the details of the deal.”
The analysts wonder how much higher consumer sentiment can rise:
At this stage in the expansion, additional improvements in employment and wages should disproportionately benefit low-wage, underemployed and discouraged workers. These groups still represent large portions of the population by historical standards. As they reenter the labor force and earn higher salaries, aggregate U.S. consumer confidence is likely to further increase. However, low-income consumers account for a disproportionately small share of discretionary spending which means that further gains in confidence will likely result in lower marginal gains in consumer spending.
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 number 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 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 108.1 last week, up 1.4 points from the previous week. Among households with income between $150,000 and $200,000, the overall score rose by 1.1 points, and overall sentiment among households with incomes between $200,000 and $250,000 fell by 5.0 index points to post a score of 125.3. Households with incomes over $250,000 posted a drop of 2.5 index points to 138.8.
Among African Americans, overall sentiment rose by 2.3 points to 113.4, while falling by 1.6 points to 114.5 among Hispanics.
By industry sector, the transportation industry posted the largest week over week gain, up by 4.7 points to 126.2. Sentiment among health care workers rose by 2.9 points to 116.5, while sentiment fell by 1.2 points in the professional and business services sector.
Top executives posted a 3.1-point jump in overall sentiment for a score of 124.2. Sentiment among CEOs leading businesses with more than 100 employees tumbled by 8.5 points to 149.0, while sentiment among CEOs of business with 21 to 100 employees saw a 3.4 point drop to 123.5. Top executives at businesses with one to five employees posted an index score of 120.4, up by 6.9 points week over week.
Looking at responses to questions about future economic conditions, top executives of companies with more than 100 employees posted an index score of 149.2, down 6.9 points week over week. At companies with more than one to five employees, executives lifted the score by 6.6 points to 122.7.
Manufacturing workers’ view of current economic conditions rose by 3.0 points last week to 126.6, while workers in agriculture workers added 1.6 points to their index score, sending it to 124.8.
Company executives’ opinion of current economic conditions improved last week with the index score rising by 3.3 points to 122.2, equal to the 52-week high.
When asked about 12-month expectations for their personal finances, Americans between the ages of 18 and 24 shaved 3.8 points from their index score to post a score of 138.9, nearly identical with 35-to-44-year-olds, who posted a score of 138.3. Millennials are far more optimistic than boomers, who posted an index score of 108.9.
Looking at retail sales during the holiday season, Morning Consult commented:
Initial estimates from payments companies support the view that sales beat consensus forecasts, and consumer financing growth also remains strong. However, as retail sales increasingly migrate online, it has become more important to take into account the wave of returns that occurs following Christmas Day. Morning Consult’s data shows that consumer confidence remained strong even after Christmas, suggesting that post-Christmas returns will not spoil holiday sales.
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