Monday, 25 of March of 2019

Economics. Explained.  

Consumer Sentiment

March 15, 2019

The final estimate of consumer sentiment for March jumped 4.0 points to 97.8 after having risen 2.6 points in February.  The peak for sentiment was in September of last year which came in at 100.1.  The March level is clearly close.

Richard Curtin, the chief economist for the Surveys of Consumers, said, “All income groups voiced more positive prospects for growth in the overall economy during the year ahead.”   He added that, “The data indicate that real consumption will grow by 2.6% in 2019 and that the expansion will set a new record length by mid year.”

Our sense is confidence will continue to climb . in the months ahead.  Since the beginning of the year the stock market has recovered almost all of what it lost in the fourth quarter.  The Fed has said it intends to leave rates unchanged for the foreseeable future.   The government shutdown has ended.  And mortgage rates have fallen from 4.9% to 4.4%.

We expect GDP growth of 2.6% in 2019 versus 3.1% last year.  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 3.7% in 2019 vs. 2.6% last year. The core inflation rate (excluding the volatile food and energy components) should climb from 2.2% in 2018 to 2.3% in 2019.  Such a scenario would keep the Fed on track for no rate hikes at least through the middle of year and perhaps longer.

The February rebound was attributable to a moderate increase in both the current conditions and expectations components.

Consumer expectations for six months from now rose from 84.4 to 89.2.

Consumers’ assessment of current conditions climbed from 108.5 to 111.2.

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 2019.

Stephen Slifer

NumberNomics

Charleston, SC


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