US Consumer Spending Highest Since 2008 As Economic Confidence Hits Record High: Gallup

Tyler Durden's picture

Perhaps it is the last hurrah of the Trump post-election euphoria  but according to Gallup there were two notable development in February.

First, Americans' daily self-reports of spending climbed to an average of $101 in February. This, Gallup reports, was the highest average for the month of February since 2008, when spending averaged $106. The latest monthly average is up $13 from January's figure, but still lower than December's holiday-influenced $105.

Gallup notes that this is the seventh daily spending average of $100 or more that Gallup has recorded for any month over nine years of tracking Americans' spending reports, and the only one in February since 2008. During that year - but before the global financial crisis in the fall - Americans' monthly average spending exceeded $100 four times.

What makes the Gallup report even more surprising were previous reports that due to a delay in the payment of Tax refunds by the US Treasury, spending would be muted in the past month. The latest data not only refutes this assumption but suggests that the outcome was just the opposite of what many had expected.

Additionally, Gallup observes that since 2008, Americans' spending in the month of February has generally been similar to their January spending, though it is common to see a slight increase in February after January's seasonal, post-holiday drop. But the January-to-February increase in 2017 is larger than usual, with this year's $13 bump outpacing the previous record $9 increases in 2008 and 2014.

That said, the spending spree was not uniform and was mostly thanks to wealthier consumers.  The increase in spending was slight -- to $73 from $70 in January -- among Americans living in households that earn less than $90,000 annually. The increase among higher earners was much larger. Consumers in households earning $90,000 or more annually spent significantly more in February than in January -- $168 versus $142. This $26 month-to-month increase is one of the largest Gallup has found for this group in its nine years of tracking.

U.S. Consumer Spending, by Annual Household Income

Gallup's bottom line: Americans' views of the U.S. economy have improved markedly since Donald Trump's election in November; and with stock market averages reaching new highs this year, they may be in a position to feel more comfortable than they have been in loosening their purse strings.

Yet while there is a distinct risk that disappointment with Trump policies could result in a sharp slowdown, while a market slump would lead to far lower spending, for now there is no wuch concern as confirm by the second notable Gallup observation, namely that economic confidence in the latest week hit an all time high: "Many Americans either gained or regained economic optimism last week, as Gallup's U.S. Economic Confidence Index soared seven points to hit +16. This marks the highest weekly average in Gallup's nine-year trend. The index has recovered the ground it lost over the week of Jan. 30-Feb. 5, when it fell from the previous record high of +14 to +8 and languished at that lower level for the next three weeks."

One possible catalyst for the latest surge in confidence is Trump's February 28 address to Congress.

Last week was an eventful one for the U.S. economy. President Donald Trump gave his maiden address to Congress on Feb. 28, emphasizing his key economic policy goals such as lowering the corporate tax rate. Those who watched the speech were generally pleased with it, and traders on Wall Street were decidedly upbeat: Stock markets rallied on Wednesday, and the Dow Jones industrial average closed above 21,000 for the first time in its history. Federal Reserve Board Chair Janet Yellen also spoke favorably of current economic conditions in a speech on Friday.

Gallup admits that it is is impossible to know which of these events played the most important role in boosting Americans' confidence last week, "though it seems unlikely that Yellen's remarks influenced the public much given her low name recognition." Trump, meanwhile, commanded a large national audience, and his speech likely helped spark the stock market's record-setting performance the next day.

And here, another interesting twist: while one would expect Republican confidence to soar, it was Democrats who showed the largest
improvement in economic confidence from Wednesday to Sunday of last
week,
the period after Trump's speech and the stock market rally. Over
the seven days leading up these two events (Feb. 22-28), Democrats
registered an index score of -7; for the five-day period of March 1-5,
their score rose to 0. Republicans, on the other hand, showed modest
gains; their index score rose from +45 to +48 in the same time frame.

As Democrats, by and large, disapprove
of Trump's job performance as president, this would seem to suggest
that other factors, such as the stock market rally, may have helped
shape economic attitudes last week.

Breaking out confidence between current condition and the future outlook shows another interesting divergence: in February, one-third of U.S. adults (33%) described economic conditions as "excellent" or "good," while 20% rated them as "poor." This resulted in a current conditions score of +13 for the month -- a three-point increase from January's score and a nine-year high for this component.

Meanwhile, opinions about the future trajectory of the economy soured last month. Less than half of U.S. adults (48%) said economic conditions were "getting better," while nearly as many (45%) said they were getting worse -- yielding a score of +3 for the economic outlook component. In January, the economic outlook component averaged +11.

Gallup U.S. Economic Confidence Index Components

Gallup's conclusion:

Though confidence in the economy appeared to stall in the month of February after rising steadily throughout the past three months, it may have gained a second wind last week after Trump's speech to Congress and the stock market's strong performance.

Our take: markets continue to soar on consumer confidence, while consumer confidence - reportedly - is rising on all time highs in the stock market. This circular feedback loop, which is self-referential and illogical, works for time until eventually there is a snap (just like with the stock with the same ticker) and with the S&P now at the upper range of all Wall Street estimates, and even established organizations like the OECD warning that the market is "disconnected" from reality, the surge in confidence, and spending, may be about to come to an abrupt end, at the worst possible time for the Trump administration.

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froze25's picture

How is this possible, everyone that works for a living that matters Hates the president and is depressed about him winning the election... Unless of course we are being lied to.

stizazz's picture

Yesterday's ZH Headline: most Americans can't afford to write a $500 check.

Today's: Confidence. Highest Spending. Blah, blah, blah.

Talk about FAKE NEWS.

Belrev's picture

Pelosi slams Trump in most comical interview ever "President does not know what he is talking about", etc etc The entire Pelosi interview is worth the watch. It is hysterical comedy on steroids, every minute of it

 

https://www.youtube.com/watch?v=7uqw73WA2UA

froze25's picture

I guess the other half of America that can write a 500 dollar check is feeling good. I wonder if the protesters can write a 500 dollar check, or are they too busy protesting and beating people to do that?

USisCorrupt's picture

I'm with TRUMP !

Let's face it, People are buying real shit while they still can, EVERYONE realizes inflation is HERE!

SheepDog-One's picture

Paleolosi, a 5 story tall crustacean from the Paleolithic era who needs about treefiddy still apparently has no idea what a complete joke she is, pointing to final stage dementia.

Mano-A-Mano's picture
Mano-A-Mano (not verified) stizazz Mar 7, 2017 12:20 PM

lol. good catch.

Paul Kersey's picture

"Yesterday's ZH Headline: most Americans can't afford to write a $500 check.

Today's: Confidence. Highest Spending. Blah, blah, blah.

Talk about FAKE NEWS."

 

That's not fake news here.  ZH is reporting accurately.  Americans are spending more, while earning less, because they are going even deeper into debt.  THIS IS A CREDIT BUBBLE.  We've seen this movie before, and we know how it ends.

 

"Americans now hold an incredible $4.1 trillion in consumer debt.  This latest data shows that Americans are now back to having an insatiable appetite for spending beyond their means.  Unlike mortgage debt, consumer debt is not building up any future equity here.  The largest category of consumer debt is student loan debt.  Even at the peak of the last debt bubble, consumer debt totaled roughly $2.5 trillion.  While student debt makes up about $1.4 trillion of the consumer debt here, auto debt is above $1 trillion.  We’ve also seen a large rise in subprime auto debt suggesting that people are borrowing beyond their means to consume.  Delinquencies are also rising suggesting any tiny slip up in the overall economy and this credit bubble can burst too."

stizazz's picture

And you call going into debt "confidence"? Jeez.

Paul Kersey's picture

"And you call going into debt "confidence"? "

Fuck, America is close to $20 trillion in debt, the greatest debtor nation in the world, and we are told that Americans are confident. Millions of Americans are addicted to debt. All they need is an expansion of their credit to become even more confident. The first thing some folks do, when they pay off their 4 year/$300 per month car auto loan, is to go out and buy a new vehicle for double the amount they just paid off. They keep their $300 per month payment, but double the number of years it takes to pay off the vehicle.

Houses are getting back to the old liar loan days. There are so many nothing down loans out there, that it's pushing the prices up on new vinyl village boxes. Now that the banks don't have to worry about getting nailed for QM (Qualified Mortgage) provisions, anyone with a pulse will be able to leverage his/her way into the next available vinyl box.

What will cause the end of consumer confidence? Credit tightening, but that ain't going to happen as the banksters have been given the green light to extract all possible rents and payments out of the debt-addicted, no-money-in-the-bank consumer. Only the banks, with their taxpayers' bailouts, will remain confident.

truthseeker69's picture

Don't you worry Paul....Trump will MAGA! Have you heard? Trumpcare (obamacare lite) around the corner. More infrastructure spending. And More Military Metal! 

MAGA MAGA MAGA!!! 

USA USA USA!!!

 

/Chump

how_this_stuff_works's picture

You know, I gotta say I don't get it.

Typically, things slow down post-holiday because people anticipate the arrival of their credit card bills in January. No such thing this year. In fact, I can't believe all the cars on the road and the ongoing retail activity.

I'm not, but others are.

Leebo's picture

Frivolous spending is self-medicating for people with mania and depression.  Thats really all I need to say but I'll go further.  Perhaps everyone is spending because their intuition is telling them they may not have much more time to do so.  When things flip and the music stops watch everyone jump to the closest chair.  Unfortunately while everyone was dancing chairs have been steadily disappearing.  When money begins its flight to safety, those without cash will be left out in the rain to fend for themselves.  

how_this_stuff_works's picture

Mania, depression or simply---denial.

I can agree people may be spending because time is short. Overall, I don't think most see any darkness on the horizon, and if they do, it's the "I can't do anything about it" approach.

Leebo's picture

The thing about mania is no one in that state of mind is thinking about the future at all, same as depression, except mania fulfills as many pleasures as possible in the shortest time possible.  Mania is an addicts preferred state.  Everyone is blowing sunshine up there own asses the have no clue what to think of the future, they just want to feel good now, consequences aside.

Nobody For President's picture

No - it is as simple as the differences between Averages and Medians. The average spending is sucked way the fuck up by the $90 K a year and up 'consumers'. The median spending would be a lot less.

Nevermind - BTFD.

I note silver is on sale...I may become a consumer this week.

Raffie's picture

They talked to the ultra rich people who are spend thrifts and concluded all is well for everyone.

 

 

Mimir's picture

The so-called President and the so-called optimism.

SheepDog-One's picture

Since Lehman! Could just be Russia hacked the report though.

stizazz's picture

Talk about FAKE NEWS.

Hohum's picture

Isn't consumer spending setting a record EVERY month?

SheepDog-One's picture

Yea that's pretty much how I recall the narrative.

ParkAveFlasher's picture

Nevermind that!  Get back in there and BUY

silverer's picture

Perhaps. But so is government spending.

www.usdebtclock.org

Mimir's picture

"the market is "disconnected" from reality"

is the main message to take home and any increased spending is based on increasing debts. 

BeanusCountus's picture

Just me, but I would almost always expect February daily spending to increase a little from January due to less days in a month for all salaried people to spend.  But definitely agree that debt figures have to be looked at in conjunction with the spending figure.

Soul Glow's picture

I'm pretty confident spending my dollars too.  I mean, they are intrinsically worthless yet have better purchase power than anything on the globe right now, so why not spend them?  For example I took a wallet full into my coin shop yesterday.  Problem was they were all out of dimes.  That's right, all out of silver dimes.  So I went to the backup coinshop and used them to buy a few rolls of dimes.  

Why wouldn't anyone spend dollars?  There is no savings rate on them, and asset prices continue to go up up up.  So if someone is a dingleberry buy stocks, if you like new clothes go shopping, if you are a boomer and want to be closer to your grandkids buy a second house.  But seriously, spend those dollars.  You don't know how much longer they will hold such purchasing power.

Ink Pusher's picture

Q. Why don't you ask me what my confidence level pertaining to the accuracy of the Gallup or any other Corporate Pollster?

A. Because you already know it's at a big fat fuckin' ZERO!

 

 

buzzsaw99's picture

earned income tax credits be hittin' the 'hood.

aztrader's picture

Very true.  I bet if you did a spreadsheet on where the largest amount of these credits go and compare it to retail sales in those areas, you would find that the government sponsored all spiked spending.  These credits need to go.  Too easy to issue a phony 1099 and get the rebate.

Atomizer's picture

Boo hoo, I want my ATM service hooked back to my house. Wellfuck sticks, that's the least of your worries. 

Deutsche Bank's ongoing problems not holdingback its CRE lending - CoStar

aztrader's picture

No discussion of inflation.........As a retailer, we are not seeing any spike in spending, but only in our cost to run the business.  Everything has been going up in cost because all these greedy f*ks running these companies need to justify their insane stock price.  Business has not gotten better, just more expensive.  Look at all the retail stocks and judge for yourself.

Yen Cross's picture

  Moar soft bullshit data. That's why 2/3rd's of Amerikans can't even pay for an emergency room visit.

 Did I forget to mention that all the criminal Crimex Cartel, gold and silver slamming scumbags, shoud be drawn and quartered?

corporatewhore's picture

wasn't there an article on the news just yesterday about most americans can't even write a check for $500?   Lmfao!

silverer's picture

Oh, they can write the check. Whether it will clear is a different story.

Ben A Drill's picture

Maybe people are retiring. Spending their 401K money. Downgrading from large house to a smaller one. Moar EBT money. Paying Peter to pay Paul.

hotrod's picture

HH Greg, Macys, Target, Sears, Kmart, Limited, Sports Authority, Ralph Lauren, Walmart, Fitch, WetSeal, Pennys etc. etc.

STOP CLOSING YOUR STORES.

mily's picture

Can see a little bit of parity funds sellin' going on today and VIX won't budge, come on ppl, no one needs puts anymore? Everyone's scrambling for calls? /s

Nobodys Home's picture

Sheeple. Muppets. ...and then the rest of us that know it's about to become a shit show and don't respond to poll requests.

Kaiser Sousa's picture

"when shit gets seriously fucked up ypu have to LIE...."

 - Kaiser Sousa -

i suppose excluded from this Gallup "poll" would be the 60% of Ameridumbs that dont have at least $500 cash for and unexpected emergency...

total bullshit.

Yen Cross's picture

   Jean-Claude Juncker owns that statement.

Kaiser Sousa's picture

he left out the "fucked up" part...

i didnt...

 

RSDallas's picture

How do you explain this article listed just a few stories down?

Atlanta Fed Slashes Q1 GDP To Only 1.3% With Yellen Set To Hike

hotrod's picture

Consumer confidence is all about the stock market and that is it.  GDP been negative for years.

silverer's picture

1.3% is growth, right? Don't expect the percentage numbers to match.

hotrod's picture
The State of California reported that unemployment in Silicon Valley rose from 3.4 to 3.8 percent, as the area lost all 22,000 jobs gained in 2016 in a single month.

http://www.breitbart.com/california/2017/03/06/silicon-valley-losses-100...

Probably just Theranos, Snap and Uber.  No big deal

Consuelo's picture

 

 

I want:

 

222,000 jobs lost - monthly...   Until flashing what I had for dinner or what it looked like coming out the other end, is put back in its rightful place.

 

 

Consuelo's picture

 

 

'When I was a kid, after walking home 5 miles in snow...'

 

There was no such thing as getting high on events which hadn't even occurred yet...   It was the 'daily grind' of stacking the bricks & mortar of a financial foundation over a period of time, and if one was even reasonably prudent, he got there.

How in the Holy Fcuk then, did we arrive 'here'...? 

It's a rhetorical question obviously.