Thursday, 15 of November of 2018

Economics. Explained.  

Consumer Sentiment

November 9, 2018

The preliminary reading for consumer sentiment for November was 98.3 versus a final reading of 98.6 in October.  The November level was 3.1 points lower than March’s level of 101.4 was the highest level of sentiment since January 2004.  Thus, sentiment remains at a very lofty level.

Richard Curtin, the chief economist for the Surveys of Consumers, said, “Consumer sentiment remained virtually unchanged in early November from its October reading. Importantly, interviewing went through Wednesday night so there was a one-day overlap after the mid-term election results were known by consumers. Those few cases held expectations that were identical with the data collected earlier in the month, which is not so surprising given that the split between the House and Senate was widely anticipated.”

Given the tax cuts we expect GDP growth to climb from 2.5% in 2017 to 3.0% in 2018 and 2.9% in 2019.  We expect the economic speed limit to be raised from 1.8% to 2.8% within a few years.  That will accelerate growth in our standard of living.  We expect worker compensation to increase 3.5% in 2018 vs. 1.8% last year. The core inflation rate (excluding the volatile food and energy components) rose 1.8% in 2017 but should climb by 2.2% in 2018 and 2.4% in 2019.  Such a scenario would keep the Fed on track for the very gradual increases in interest rates that it has noted previously.  Specifically, we expect the funds rate to be 2.2% by the end of 2018 and 3.2% by the end of next year.

The modest September decline was attributable to both the expectations and current conditions components.

Consumer expectations for six months fell from 89.3 to 88.7.

Consumers’ assessment of current conditions edged upwards from 113.1 to 113.2.

Trends in the Conference Board measure of consumer confidence and the University of Michigan series on sentiment move in tandem, but there are often month-to-month fluctuations.  Both series remain at levels that are consistent with steady growth in consumer spending at a reasonable clip of about 2.5% in 2018.

Stephen Slifer

NumberNomics

Charleston, SC


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