Preliminary Results for February 2017
Feb Jan Feb M-M Y-Y
2017 2017 2016 Change Change
Index of Consumer Sentiment 95.7 98.5 91.7 -2.8% +4.4%
Current Economic Conditions 111.2 111.3 106.8 -0.1% +4.1%
Index of Consumer Expectations 85.7 90.3 81.9 -5.1% +4.6%
Next data release: February 24, 2017 for Final February data at 10am ET
Surveys of Consumers chief economist, Richard Curtin
Consumer confidence retreated from the decade-peak recorded in January, with the decline centered in the Expectations Index. To be sure, confidence remains quite favorable, with only five higher readings in the past decade. Importantly, the data do not reflect any closing of the partisan divide. The Michigan survey includes several free-response questions which ask respondents to answer in their own words, without any prompting or proposed answer categories. When asked to describe any recent news that they had heard about the economy, 30% spontaneously mentioned some favorable aspect of Trumpís policies, and 29% unfavorably referred to Trumpís economic policies. Thus a total of nearly six-in-ten consumers made a positive or negative mention of government policies. 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. 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. These differences are troublesome: the Democratís Expectations Index is close to its historic low (indicating recession) and the Republicanís Expectations Index is near its historic high (indicating expansion). While currently distorted by partisanship, the best bet is that the gap will narrow to match a more moderate pace of growth. Nonetheless, it has been long known that negative rather than positive expectations are more influential in determining spending, so forecasts of consumer expenditures must take into account a higher likelihood of asymmetric downside risks.