Republican finally cracked. After months of extremely partisan divergence in the UMich confidence data, the loss in confidence for self-identified Republicans fell notably more than for Democrats (who were already significantly lower). Both current and future expectations tumbled to their lowest since Nov 2016.
As UMich explains...
While this break corresponds with James Comey's testimony, only a few consumers spontaneously referred to him or his testimony when asked to explain their views.
Importantly, the decline was observed across all political parties, but the loss in confidence among self-identified Republicans since June 8th was larger than among Democrats (9.2 vs. 6.8 Index-points), with Independents showing the greatest falloff (11.5 Index-points).
The size of the partisan difference between Democrats and Republicans in the Expectations Index, however, was largely unchanged (55.6 Index-points prior to June 8th, and 51.2 after).
The recent erosion of confidence was due to more negative perceptions of the proposed economic policies among Democrats and the reduced likelihood of passage of these policies among Republicans. Fortunately, a strong job market, improved household income and wealth have provided a financial buffer against rising uncertainties.
Nonetheless, consumers have become less optimistic about the future course of the domestic economy. Even with the expected bounce back in spending in the current quarter, personal consumption is expected to advance by 2.3% for all of 2017.
Interestingly medium-term inflation expectations jumped from 2.4% to 2.6% but short-term remained unchanged at 2.6%.