If one listens to the NFIB small business survey, or for that matter any of the other periodic confidence surveys over the past year virtually all of which are at or near record highs, life in the US has never been better.
And indeed, with the Fed's Flow of Funds report calculating that US household net worth has never been higher, just surpassing $100 trillion for the first time ever, perhaps the US has finally stumbled into a state of utopia...
... even if as the chart below shows, the rising value in mostly financial assets benefits only 10% of the US population, as more than half of Americans have zero assets to their name.
So maybe America is truly living through a golden age. Then again, maybe not, because as the latest consumer attitudes survey from Bank of America shows, while consumer sentiment was little changed, if elevated, in May, most respondents continue to report high costs of living and tepid wage growth as the main concerns to their financial situations.
As the bank reports, "the usual concerns around high cost of living (71%) and oil/gas price (60%) topped the list while risks around tightening credit conditions and deterioration of the labor market seemed limited."
As one would expect, the top concern varied by age group, with younger respondents (those in their 20s) reported difficulty in finding jobs to be the second biggest risk as respondents in this group are more likely to be students looking for employment opportunities. Meanwhile, for the older cohort (60 and up), financial security is the biggest concern as stock market crash ranks high on the list. This is to be expected as they are closer to or at retirement age and more risk averse about their investments.
That said, in validation of the recent surge in confidence, 42% of respondents reported that the economy is in a better place today than it was a year ago compared to 31% who reported that it had worsened.
In a survey of consumers' views of the labor market showed that conditions remain in favor of the worker, with the majority of respondents reported that conditions are about the same or easier to find a job compared to a year ago.
An interesting divergence emerged in the survey of how likely it is for Americans to lose their jobs. According to BofA, consumers on balance thought it was less likely to lose a job today compared to a year ago. Overall, 32% of respondents said it is less likely to lose a job now compared to a year ago while 30% thought it is more likely.
However, the optimism was not uniform, as breaking down the answers by income group, people are relatively optimistic except for those with an annual income less than $50k. For the bottom income group (<$50k), 35% of people think it is more likely to lose jobs now than a year ago while only 26% said it is less likely. This is in stark contrast with the top income group (>$125k) where just 24% said it is more likely to lose jobs now and 41% reported that it is less likely. In other words, those making low incomes have to worry not only about making ends meet but also losing their job to Johnny 5.
Finally, in a special batch of questions looking at the impact of the gig/sharing economy, BofA finds that it's not quite as popular as many try to make it, with a large majority (71%) reporting that they do not work or have an income stream from the sharing/gig economy while only 7% of respondents reported it as their only source of income. This is consistent with research which finds that roughly 10% of workers were employed in "alternative work arrangements." Moreover, the Economic Policy Institute which finds that the gig economy consist of 0.21% of total employment and just 0.1% of total full-time, full year equivalent employment.
Drilling down, the "gig economy" seems most popular with workers on the fringes of the labor market (e.g. students, unemployed, part time workers) as they were more likely to report having income from the gig economy than full time and retired workers. These results suggest that the gig/sharing economy, while beneficial to some, has yet to meaningfully alter the fundamental structure of the labor market, something which the BLS's recent Labor Force Characteristic survey confirmed as well.
As BofA summarizes current economic conditions, as seen through the prism of its consumer survey, "consumer feels good about the economy and the labor market" even as "high cost of living and tepid wage growth remain key concerns for households but not enough to hold back consumer activity which accelerated."
BofA's conclusion: "For the consumer, right now, it's matter over mind", which means that as long as the economy (and market) continue to plow along, and are not spooked by the Fed's tightening, US consumers will prefer to keep the status quo, something which is critical for Trump and the republicans as the miderms approach. The question is whether this state of near economic bliss can sustain for the next 4 months.