American households were more optimistic in January than almost any time in the past twenty years.
The University of Michigan Consumer sentiment survey registered 99.1 last month, down from 99.3 in December. Analysts in the Reuters poll had forecast a score of 99.3.
In the 19 odd years, 230 months, since the index registered 107.7 in November 2000 only eight months have registered a better level of consumer sentiment than January and seven of those months have been in the last three years.
Reuters
Jobs, wages and the 50-year low unemployment rate of 3.5% are the main drivers of the sustained surge in consumer optimism. Satisfaction has remained high despite the collapse in manufacturing employment last year as the sector contracted under pressure from the US-China trade dispute. New hiring fell to 46,000 last year from 246,000 in 2018.
It will take several months for the anticipated economic benefits of the China trade deal to become evident in statistics but one of the first places analysts will look will be in business spending, investment and agricultural exports. If these improve then growth and employment will be expected to follow. A rising US economy will likely push the dollar higher by the end of the first quarter.
The index of satisfaction with consumers’ current economic conditions rose to 115.8 in January from 115.5 in December. The forecast was for a decline to 115.0.
Reuters
The index of consumers’ expectations for their financial conditions in six months fell to 88.3 from 88.9 in December. A score of 89.0 had been projected by economists.
Reuters
"Consumers will continue to sustain the expansion due to their favorable judgments about their current and prospective financial situation," noted Richard Curtin the survey’s chief economist. He suggested that consumer spending should remain strong in the near term
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