Despite a rebound in business survey hope, a number of consumer confidence measures have been tracking lower in recent months as Trumphoria fades. July's final UMich consumer confidence data confirms this trend printing at 93.4 - the lowest since Oct 2016. While current conditions rose to the highest since July 2005, the biggest driver of the overall decline was a tumble in the 'expectations' index.
Although a slight improvement on the early month preliminary print, the trend remains lower...
The partisan divide over confidence remains extreme...but the partisan gap has narrowed in recent weeks, mostly due to Republicans tempering their optimism. The recent declines among Republicans were somewhat predictable, but the continuation of extreme pessimism among Democrats is more surprising; although, a partisan pessimism is easier to maintain when personal finances are at the highest levels recorded since 2000. Overall, the data continue to indicate a gain of 2.4% in personal consumption in 2017.
Moreover, UMich notes that while current conditions were judged strictly on the performance of the economy, expectations continue to be significantly influenced by partisanship: the difference on the Expectations Index between Democrats and Republicans was 45 Index-points (63.7 versus 108.7); among self-identified Independents, in contrast, the Expectations Index was exactly equal to the weighted difference between the partisan extremes (80.5).
Partisan perceptions of recent economic developments have lessened, although the change was mainly due to less extreme Republican views.
Overall, fewer consumers anticipated an improved economy in the year ahead, falling to 28% from 42% three months ago.
Long term prospects for the economy were still dominated by partisanship, as 70% of Republicans expect a continuous expansion and 66% of Democrats expect a renewed downturn sometime in the next five years. Unemployment, a top concern of consumers, was expected to fall from its current low level by 52% of Republicans, and to increase by 43% of Democrats.
The only partisan consensus was by the three-quarters of consumers that expected interest rates to increase.