A positive outlook for the general economy drove the increase
An index of consumer confidence rose to its highest level so far this year in the first of half of August, according to the preliminary results of the Surveys of Consumers by University of Michigan.
The index of consumer sentiment increased on both monthly and annual bases. According to the preliminary results, the index was 97.6, up 4.5% from the 93.4 level a month ago and an 8.7% increase from the 89.8 level in the same period in 2016.
On a monthly basis, the two component indices moved in different directions. The index of current economic conditions was 111.0 under the preliminary results, a 2.1% decrease from the 113.4 level in July. The index of consumer expectations rose 10.6% to 89.0 from 80.5 last month. On a yearly basis, however, both indices posted gains, with the conditions index growing 3.7% from last year and the expectations index rising 13.1% from the year-ago level.
Richard Curtin, chief economist of the surveys, said a more positive outlook for the overall economy coupled with more favorable prospects for personal finances drove the index to its highest level since January. However, Curtin said that consumer outlook might be affected the aftermath of a recent white-supremacist rally in Charlottesville, Va., which led to one death and a broadly condemned response from President Donald Trump. However, there were too few interviews following the events in Charlottesville to determine how these will impact consumers’ economic assessments.
“The fallout is likely to reverse the improvement in economic expectations recorded across all political affiliations in early August,” Curtin said. “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 index of consumer sentiment increased on both monthly and annual bases. According to the preliminary results, the index was 97.6, up 4.5% from the 93.4 level a month ago and an 8.7% increase from the 89.8 level in the same period in 2016.
On a monthly basis, the two component indices moved in different directions. The index of current economic conditions was 111.0 under the preliminary results, a 2.1% decrease from the 113.4 level in July. The index of consumer expectations rose 10.6% to 89.0 from 80.5 last month. On a yearly basis, however, both indices posted gains, with the conditions index growing 3.7% from last year and the expectations index rising 13.1% from the year-ago level.
Richard Curtin, chief economist of the surveys, said a more positive outlook for the overall economy coupled with more favorable prospects for personal finances drove the index to its highest level since January. However, Curtin said that consumer outlook might be affected the aftermath of a recent white-supremacist rally in Charlottesville, Va., which led to one death and a broadly condemned response from President Donald Trump. However, there were too few interviews following the events in Charlottesville to determine how these will impact consumers’ economic assessments.
“The fallout is likely to reverse the improvement in economic expectations recorded across all political affiliations in early August,” Curtin said. “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.”
Related stories:
More Americans now concerned about housing price correction
Housing sentiment falls in July
