It is becoming increasingly clear that more and more American households are expecting a Donald Trump administration to deliver. They are more upbeat about the prospects for the economy, the labor market and their incomes, according to the Conference Board’s latest Consumer Confidence Index released on December 27.
The results corroborate surveys by the University of Michigan and the National Federation of Independent Business, both of which showed jumps in household and business sentiment in December – amid Trump’s pledges to boost jobs, cut taxes and ease regulations.
Consumer confidence reached another post-recession high in December, as the stock market soared to a new record after the election of Donald Trump. And the outlook for the job market remains robust with the unemployment rate at 4.6% in November.
The Conference Board reported last week that its Consumer Confidence Index increased to 113.7 in December from an upwardly revised 109.4 in November. That was well above the pre-report consensus of 109.8.
A separate measure in the report found that consumer expectations for the next six months rose to 105.5 in December from 94.4 in November, the highest reading since December 2003. This was also considerably stronger than the pre-report expectation.
The share of Americans expecting better business conditions six months from now rose to 23.6% from 16.4% in November, the highest since February 2011. Those expecting business conditions to worsen declined from 9.9% to 8.7% in December.
The share of respondents who expected their incomes to rise in the next six months rose to 21.0% from 17.4% just a month earlier. The share of respondents expecting stock prices to be higher in the next year surged to 44.7%, the highest reading since January 2004.
“The post-election surge in optimism for the economy, jobs and income prospects, as well as for stock prices which reached a 13-year high, was most pronounced among older consumers,” said Lynn Franco, director of economic indicators at the Conference Board, a non-profit business research organization in New York.
Specifically, consumer confidence was the strongest among Americans 55 years and older, which rose to the highest level since July 2007. More Americans reported plans to purchase automobiles and major appliances than in the November reading.
Not all the news in the latest report was good, however. Consumers’ assessment of current conditions declined in December. The Present Situation Index fell to 126.1 from 132.0 in November. Consumers who said business conditions are “good” fell to 29.2% from 29.7%. Those saying business conditions are “bad” increased to 17.3% from 15.2%.
The other piece of bad news in the report was the fact that consumer confidence among Americans 35 and under fell in December. Millennials in general do not have an optimistic view of the economy or the job markets. That’s a different topic for another time.
What’s Causing the Big Jump in Confidence?
Most analysts concede that the latest strong jump in confidence is largely due to the election of Donald Trump and his promises to cut personal and corporate taxes, create more jobs and roll back onerous federal regulations.
I would agree in-part with that assessment, but I think there’s more to it than just Trump. I believe that many Americans are growing more confident because they know President Obama will be gone on January 20.
President Obama bragged recently that he would easily have won a third term, running against Donald Trump. Yet Democrats have lost more seats in government (federal, state and local) during his two terms than at any time since the post-Civil War period of Reconstruction. Isn’t it possible that years of Obama’s policies have at least something to do with this fact?
Look at what has changed since Obama became president. More people are on food stamps than ever before. More people successfully apply to get on Social Security at a younger age (via Social Security Disability) than ever before.
Taxes are higher. Government regulations have led to more businesses closing than starting up for the first time since the Depression. This has been the slowest economic recovery since 1949. I could go on and on.
I think it’s unmistakable that a growing number of Americans are becoming more and more optimistic about President-elect Donald Trump, as evidenced by the big jump in the confidence indexes since the election. Yet I think the indexes are also being buoyed by the fact that we will be saying “adios” to the most liberal president in my adult lifetime. Just saying…
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