Consumer sentiment shows concerning partisan gap

Americans now more divided than ever

Consumer sentiment is down for the beginning of February, but the partisan divide is growing stronger than ever, with no signs of letting up.

The Index of Consumer Sentiment decreased as the start of February to 95.7, according to the Survey of Consumers conducted by the University of Michigan. This is down 2.8% from January’s 98.5 but up 4.4% from last year’s 91.7.

The drop was mainly due to the Index of Consumer Expectations, which dropped to 85.7, down 5.1% from last month’s 90.3. However it was still up 4.6% from last year’s 81.9.

“To be sure, confidence remains quite favorable, with only five higher readings in the past decade,” Surveys of Consumers Chief Economist Richard Curtin said. “Importantly, the data do not reflect any closing of the partisan divide.”

The survey showed a slight decrease in Current Economic Conditions, which decreased 0.1% from las month’s 111.3 to 111.2 in February. However, this is still up 4.1% from 106.8 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.

“The Michigan survey includes several free-response questions which ask respondents to answer in their own words, without any prompting or proposed answer categories,” Curtin said. “When asked to describe any recent news that they had heard about the economy, 30% spontaneously mentioned some favorable aspect of Trump’s policies, and 29% unfavorably referred to Trump’s economic policies.”

Curtin explained how these numbers showed a more divided nation than ever.

“In the long history of the surveys, this total had never reached even half that amount, except for five surveys in 2013 and 2014 that were solely dominated by negative references to the debt and fiscal cliff crises,” he explained. “Moreover, never before have these spontaneous references to economic policies had such a large impact on the Sentiment Index: a difference of 37 Index points between those that referred to favorable and unfavorable policies.”

Previously, Curtin explained that the divide was normal, and would soon level out. Now, however, he described the divide as “troublesome.”

“These differences are troublesome: the Democrat’s Expectations Index is close to its historic low, indicating recession, and the Republican’s Expectations Index is near its historic high, indicating expansion,” he explained, adding in that there is still hope for the gap to narrow in coming months. “While currently distorted by partisanship, the best bet is that the gap will narrow to match a more moderate pace of growth.”

But consumers aren’t the only ones that are concerned. Recently, Goldman Sachs explained why its growing uncertainty caused it to reevaluate its economic predictions for the year.

Most Popular Articles

Airbnb properties wouldn’t make a dent in housing market

While the real estate market has lots of challenges during the COVID-19 pandemic, a tsunami of houses being sold by Airbnb hosts who can’t pay their mortgages isn’t one of them. HW+ Premium Content

Jun 02, 2020 By

Latest Articles

Here’s evidence of V-shaped recovery

This week, the “V-shaped” recovery in purchase applications is mimicked by the inverted “V-shaped” recovery of the St. Louis Stress Index. According to HousingWire Columnist Logan Mohtashami, this signals a return to a much more calm financial market.

Jun 05, 2020 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please