Consumer confidence moderated this month, according to a new report from the University of Michigan. Specifically, the headline sentiment gauge fell to 94.4 in January, the lowest reading since July and much worse than the 97.0 print analysts had expected. However, all of the weakness this month was due to a decline in surveyed Americans’ opinion of current economic conditions, while respondents’ outlook on the future actually improved slightly.
Continued strength was also seen in consumers’ expectations for their personal finances, and reported buying plans remained elevated. The recently passed tax bill likely helped because among the respondents that mentioned government policy in this month’s survey, 70 percent said that they believe the impact of recent tax reform will be a net positive for them. Richard Curtin, the chief economist at the Surveys of Consumers, added that “Near- and long-term gas price expectations inched upward in early January but remained significantly below their peak. While long-term inflation expectation remained at its 2017 average level and short-term inflation expectation inched upward, consumers continued to remain very optimistic about the low national unemployment rate.”
Sources: Econoday, University of Michigan, Twitter, Bloomberg, FRBSLPost author: Charles Couch