More Americans optimistic about economic future – except Democrats
Survey shows Democrats believe recession is imminent
While consumer optimism is up across the U.S., one demographic disagrees with the general optimism – Democrats.
Consumer sentiment increased at the beginning of March to 97.6, up 1.3% monthly from February and up 7.3% from last year, according to the Survey of Consumers conducted by the University of Michigan.
“The overall level of consumer sentiment remained quite favorable in early March due to renewed strength in current economic conditions as well as the extraordinary influence of partisanship on economic prospects,” Surveys of Consumers Chief Economist Richard Curtin said.
The Current Economic Conditions component increased 2.7% from February to its highest level since 2000. This is up 8.4% from March last year. However, while Curtin points out this component wasn’t effected by the lack of optimism, the same can’t be said of the Index of Consumer Expectations.
The expectations index among Democrats sits at 55.3, a level that signals a deep recession is imminent. But among Republicans, the index sits at 122.4, indicating an era of robust economic growth is on the way.
The indexed increased slightly by 0.2% from last month to 86.7%. This is an increase of 6.4% from last year.
An article by Jill Mislinski for Advisor Perspectives explains what this means historically:
The Michigan average since its inception is 85.4. During non-recessionary years the average is 87.6. The average during the five recessions is 69.3.
“Importantly, there was no moderation in these extreme views from last month, with the maintenance of the partisan divide fueled by selective attention to economic news, with Democrats more frequently reporting unfavorable developments and Republicans more frequently hearing of favorable changes,” Curtin said.
“Overall, the sentiment data has been characterized by rising optimism as well as by rising uncertainty due to the partisan divide,” he said. “Optimism promotes discretionary spending, and uncertainty makes consumers more cautious spenders. This combination will result in uneven spending gains over time and across products.”
However, while Democrats are becoming more uncertain, all other signs of optimism are up. Builder confidence in the market for newly-built single-family homes just hit a 12-year high after seeing President Donald Trump’s actions on regulatory reform, according to the latest National Association of Home Builders and Wells Fargo Housing Market Index.
And Consumers’ faith in the housing market is stronger than it’s ever been before, according to a newly released survey from Fannie Mae.