Consumer Confidence Highest In 16 Years

Financial FAQs

The Conference Board’s Consumer Confidence Index soared to its highest level in 16 years. Its Consumer Confidence Index®, which had already increased in February, improved again in March. The Index now stands at 125.6 (1985=100), up from 116.1 in February. The Present Situation Index rose from 134.4 to 143.1 and the Expectations Index increased from 103.9 last month to 113.8.

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Graph: Econoday

“Consumer confidence increased sharply in March to its highest level since December 2000 (Index, 128.6),” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers’ assessment of current business and labor market conditions improved considerably. Consumers also expressed much greater optimism regarding the short-term outlook for business, jobs and personal income prospects. Thus, consumers feel current economic conditions have improved over the recent period, and their renewed optimism suggests the possibility of some upside to the prospects for economic growth in the coming months.”

But the survey was completed before Republicans pulled the Obamacare repeal bill. And if Congress can’t agree on passage of tax reform legislation, which will be just as controversial, then such optimism could turn into pessimism that has haunted past deadlocked Congresses.

And interest rates are falling, even with the Federal Reserve predicting it might continue to boost short term rates. For instance, the 10-year Treasury yield has dropped to 2.35 percent, unheard of except when economic growth has slowed to a crawl, or a recession is looming.

This is what happens when the so-called Treasury yield curve flattens. Then there is less room for banking profits, since short term rates the Fed controls are basically banks’ cost of doing business, and longer term rates are what they earn when they lend money.

Consumers were significantly more optimistic about the short-term outlook. The percentage of consumers expecting business conditions to improve over the next six months increased from 23.9 percent to 27.1 percent, while those expecting business conditions to worsen declined from 10.5 percent to 8.4 percent.

Consumers’ outlook for the labor market was also more upbeat. The proportion expecting more jobs in the months ahead increased from 20.9 percent to 24.8 percent, while those anticipating fewer jobs declined from 13.6 percent to 12.2 percent. The percentage of consumers expecting their incomes to increase improved from 19.2 percent to 21.5 percent, while the proportion expecting a decrease declined from 8.1 percent to 7.0 percent.

But these heightened expectations can only be fulfilled with a Trump team that knows what it is doing, which President Trump will eventually realize requires skilled and knowledgeable people to run the various government agencies, rather than the ideologues he has been appointing to date that are intent on “de-constructing” government, to use the words of Breitbart’s Steve Bannon, now his chief White House strategist.

Harlan Green © 2017

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

About populareconomicsblog

Harlan Green is editor/publisher of PopularEconomics.com, and content provider of 3 weekly columns to various blogs--Popular Economics Weekly and The Huffington Post
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