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Consumer Sentiment: Dominated By Politics

February 24, 2017

Bottom Line: Consumer sentiment fell, just slightly, for the first time since the election. Averaging 97.7 for the last 3 months, higher than any 3 month period since early 2004, the survey's economists noted this would usually correlate with consumption growth of 2.7%. However, there is a sharp divide along political leanings of those surveyed with Republicans expecting strong growth and Democrats expecting recession. Independents tip the overall survey results higher. February Expectations Index for Dems was 55.5, Republicans, 120.1, and Independents, 89.2. The potential for volatility and differences in consumer spending patterns based on political leanings is now very high and aggregate historical correlations may not be as useful for economists in the coming quarters.

Consumer Sentiment was REVISED UP by 0.6 points in late February to 96.3%, compared with market expectations for a small increase to 96.0%. Sentiment has improved by 2.5 points over the past 3 months. Despite this month's modest decline, compared to January's final level of 98.5%, sentiment is 5.0% ABOVE its year ago level.

Current Conditions were REVISED UP by 0.3 points to 111.5%. Current conditions are now 4.4% ABOVE their year ago level.

Consumer Expectations were REVISED UP by 0.8 points to 86.5%. Despite this month's modest decline, compared to January's final level of 90.3%, expectations are 5.6% ABOVE their year ago level.

Article by Contingent Macro Advisors