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Consumer optimism sees slight uptick in April

Partisan divide subsides significantly

Consumer optimism increased slightly in April, jumping just 0.1 percentage point, according to the Survey of Consumers conducted by the University of Michigan.

The Index of Consumer Sentiment increased to 97 in April, up 0.1% from 96.9 in March and 9% from 89 in April last year. However, it is down from the beginning of April when the index increased to 98.

“Consumer sentiment continued to travel along the high plateau established following Trump's election, with only minor deviations from its five month average of 97.4,” Surveys of Consumers Chief Economist Richard Curtin said. “There was widespread agreement among consumers on their very positive assessments of the current state of the economy as well as widespread disagreement on future economic prospects.”

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 Current Economic Conditions section slipped 0.4% from March’s 113.2 down to 112.7, but up 5.6% from 106.7 last year.

The Index of Consumer Expectations increased 0.6% from March’s 86.5 and 12.1% from last year’s 77.6 to 87 in April.

“Although the partisan divide has slightly narrowed in recent months, it still reflects a very pessimistic economic outlook among Democrats and a very optimistic outlook among Republicans,” Curtin said. “The partisan divide on the Expectations Index was 51 points in April, 61.4 versus 112.4, down from last month's 63.1, 59.4 versus 122.5, with Republicans moderating their optimism more than Democrats reduced their pessimism.”

Curtin explained the divide is due to American’s selective perception of news.

“Favorable economic developments were cited by nearly all Republicans in April, while three-quarters of Democrats reported hearing negative news about the economy,” he said. “It is of some interest to note that the Expectations Index among self-identified Independents, who may be less susceptible to traditional political ideologies, rose to a very favorable 91.3 in April, up from March's 85.8 and well above the pre-election October reading of 73.1.”

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