Improving Incomes Stabilizes Consumer Confidence
Consumer confidence has remained relatively stable over the past three quarters, with only small monthly variations, according to the University of Michigan (U-M) Surveys of Consumers. Survey results attribute the stability to increased optimism about personal finances offsetting expectations of slower economic growth.
U-M’s Surveys of Consumers show that consumers view their financial prospects as the best in the decade, while attitudes about the economy are split evenly between those who expect renewed gains and those who anticipate worsening conditions. Ultimately, consumers anticipate continued expansion, but increasingly recognize that it will not be strong enough to provide further cuts in the already low unemployment rate. U-M’s data indicates gains of 2.7 percent in real consumer spending in 2016.
“Consumers widely anticipated that gasoline prices will slowly increase in the year ahead, and anticipated that the slower pace of economic growth will more than likely put an end to further declines in the unemployment rate,” says U-M Economist Richard Curtin, who directs the surveys. “What is surprising is that the expectation of higher prices and higher unemployment has not caused an increase in uncertainty about personal financial prospects. To be sure, the positive outlook for consumer spending is contingent on the view held by most consumers that the jobless rate will be maintained close to its very low current level and that gas prices will increase only modestly above their recent lows.”
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