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UMich Economic Confidence Tumbles To Lowest Since Election

Courtesy of ZeroHedge. View original post here.

Following The Conference Board’s better-than-expected higher print (driven by ‘hope’), UMich saw confidence drop to its lowest since September as current economic conditions slumped to weakest since the election.

While ‘hope’ rose modestly from 84.3 to 86.3, current economic conditions slumped to the lowest since Nov 2016…

As UMich chief economist Richard Curtin notes, consumers continued to expect growth in jobs and incomes, but anticipated a slightly higher inflation rate.

Importantly, the motivating force behind purchase decisions has shifted from discounts on prices and interest rates to increased confidence in future job security and growth in wages as well as financial assets. This renewed sense of confidence was responsible for the recent declines in savings rates.

The tax cuts will increase discretionary spending once higher energy bills due to the unusually cold weather are paid. Monetary policy will need to tighten in the year ahead, but given consumers’ decade long experience with record low interest rates, only modest increases in interest rates will be sufficient to curb any excesses. Overall, the data signal an expected gain of 2.8% in real personal consumption expenditures during 2018.

Stock price increases and the passage of tax reforms were mentioned by all-time record numbers of consumers.

As a reminder, the yawning gap between exuberant confidence and desperately low savings rates has not ended well in the past…


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