“As Good As It Gets?”: Confidence Dips As Consumers Begin To Question The “Long Expansion”

President Trump will be generally happy with the latest UMichigan Consumer Sentiment Index, which dipped modestly from 101.4, a 14 year high, to 98.8, which however was better than the 98.0 expected, and improved slightly in the 2nd half of the month, shrinking the small overall decline for April according to Umich chief economist Richard Curtin.

Looking at the breakdown, there was a decline across both current conditions and expectations, although the former dipped more than expected, as optimism was barely dented, down to 88.4 vs. 88.8 last month while the current economic conditions index fell to 114.9 vs. 121.2 last month.

Still, the final April figure was nearly identical to its 2018 average (98.9)-which was higher than any other yearly average since 107.6 was recorded in 2000 (which was, in turn, the highest yearly average in more than a half century).

According to the report, consumers are split on two main items: tax reform and trade policies, which “continue to spark spontaneous, or unaided, comments.” 

In what will come as good news to Trump and the republicans, the “spontaneous comments” about the tax reform legislation had a positive balance of opinion.

Meanwhile, as the latest Beige Book hinted (with no less than 36 mentions of the word) trade tariffs generated a negative balance of opinion. This was most obvious in the difference in the Expectation Index which was striking: positive views on tax reform had Index values 28 points higher than those who made no mention of the tax reform legislation, and negative views on tariffs had Index values that were 28 points lower than those who didn’t spontaneously mention trade.

However, in a more troubling development, UMich reported that the best simple summary of the current state of consumer confidence is that the economy is “as good as it gets.”  In other words, it’s all downhill from here.

And while consumers do not anticipate an economic downturn anytime soon, Curtin said that “the long expansion has made consumers (and economists) somewhat apprehensive about future trends.”

We wonder what consumer would say if they learned that the CBO forecasts another 10 years without a recession: as we reported two weeks ago, the CBO is now estimating that there will be no recession within the next ten years – making this the longest economic cycle without contraction in US history…234 months from June 30 2009 through Dec 31, 2028.




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