Michigan Consumer Sentiment Shows First Post-Election DropBy
Partisan divide is sharpest on record, survey chief says
Independents lean toward optimism, supporting broader index
Consumer confidence fell for the first time since November’s election, as party lines divided Americans following a boost in enthusiasm for economic policies under President Donald Trump.
The University of Michigan said Friday that its final index of sentiment for February dropped to 96.3 from January’s 98.5, which was the highest since 2004. That compares with the median projection of 96 in a Bloomberg survey and a preliminary reading of 95.7.
While confidence is still above pre-election levels, Democrats and Republicans are sharply divided on whether they expect a boom or bust, with independent voters leaning more toward optimism in a boost for the broader gauge, according to the survey. Democrats were also more positive than Republicans on their current financial situation; the opposite was the case for year-ahead views of finances.
“We’ve never recorded such a divide in our data,” with some questions going back to the late 1940s, Richard Curtin, director of the consumer survey, said on a conference call. “I can’t imagine confidence going much higher” given that economic-growth forecasts are generally in the “low 2 percent range.”
Economists’ estimates for the sentiment index ranged from 95 to 98.
The current conditions index, which measures Americans’ perceptions of their personal finances, rose to 111.5 from 111.3 in the prior month. The preliminary reading was 111.2.
The gauge of expectations six months from now dropped to 86.5 from 90.3 in January, and compared with a preliminary February measure of 85.7.
Respondents expected the inflation rate in the next year will be 2.7 percent, compared with 2.6 percent in the January survey. Over the next five to 10 years, they project a 2.5 percent rate of price growth, after 2.6 percent in the prior month.