November 17, 2016
Will consumer confidence plunge or will it improve in the wake of Donald Trump's election?
An analysis of consumer sentiment data collected prior to the election provides mixed signals, according to economist Richard Curtin, director of the University of Michigan Surveys of Consumers.
Curtin predicted a 2017 growth rate of about 2 percent in his annual forecast of consumer spending, presented today at the annual U-M Economic Outlook Conference.
"Those who expected Clinton to win were much more optimistic about future economic conditions," Curtin said. "Nonetheless, when specifically asked which candidate would be better at improving their own finances or better at improving the overall economy, there was no difference between Clinton and Trump in the October survey.
"The most common response was that it would make little difference for either their personal finances or economic growth regardless of which candidate was elected. Overall, these data provide no clear indication of how consumers will react."
The November Surveys of Consumers results will be released Wednesday. Conducted by the U-M Institute for Social Research since 1946, the surveys monitor consumer attitudes and expectations. The data are available non-exclusively via Bloomberg.
"During the past year, it has been the continued strength of consumer spending that has offset the declines in business investments and enabled the economy to avoid a recessionary downturn," Curtin said. "Nearly all of the economic gains due to low inflation, unemployment, and interest rates have already been experienced.
"While no large uptick is anticipated during the year ahead in any of these key economic factors, the best forecast is that they will inch higher but remain reasonably low. Wage gains will be the key. They are crucial to maintaining confidence at high levels, as well as allowing higher inflation and interest rates to be accepted and not disrupt spending decisions. This implies that the current expansion comes one year closer to topping the current 10-year record."