Following the biggest 2-week plunge in Bloomberg's index of economic comfort in 6 years, UMich reports a big disappointment in the preliminary print for June. At 93.1 (below the 95.0 expectation), this is the weakest print since Oct 2016 - before the election.
UMich point sout that overall, the recent data follow the same pattern repeatedly recorded around past cyclical peaks: expectations start to post significant declines while assessments of current economic conditions continue to reach new peaks. To be sure, the data do not suggest an impending recession. Rather, the data indicate that hopes for a prolonged period of 3% GDP growth sparked by Trump's victory have largely vanished, aside from a temporary snap back expected in the 2nd quarter. The declines recorded are now consistent with just above 2% GDP growth in 2017.
The drop was driven by a plunge in 'hope' as expectations dropped the most since Oct 2013.
UMich notes that the weakness in the Expectations Index in early July was concentrated among Republicans (falling to 108.9 from June’s 116.0 and February’s 120.1); Democrats continue to hold much less favorable expectations, although the Expectations Index among Democrats has markedly improved (to 63.2 from June’s 62.0 in June and 55.5 in February).
While UMich doesn't release their demographic data, Bloomberg's comfort index gives an idea of the partsan divide in confidence...