Have Consumers Forgotten Their Tariff Worries?

The final University of Michigan Consumer Sentiment Index for September rose month over month from a final August reading of 89.8 to 93.2. Economists polled by Bloomberg were expecting a final September reading of 92.0.

The final index reading in September of last year was 100.1. More favorable income trends, especially among middle-class Americans, pulled the index out of its August funk.

The survey’s chief economist, Richard Curtin, commented, “The September data indicate that gains in jobs and incomes have largely, but not completely, offset concerns about tariffs and other sources of uncertainty.”

Curtin continued, “Despite the high levels of confidence, consumers have also expressed rising levels of economic uncertainty. Some of these concerns are rooted in partisanship, some due to conditions in the global economy (Brexit, Iran, Saudi Arabia, China), and some are tied to domestic economic policies.”

Commenting on the announced beginning of an impeachment investigation of the U.S. president, Curtin noted, “Aside from the political fallout, impeachments can divert the attention of the president and Congress away from the economy, and have in the past caused consumers to lose confidence that the government will respond appropriately to counter a recessionary threat.”

The consumer expectations subindex rose by 4.4% from 79.9 last month to 83.4, and the current conditions sub-index increased sequentially from 105.3 to 108.5 (up 3%).

Year over year, the current conditions subindex dropped by 5.8% and the consumer expectations subindex fell by 7.8%.

Consumers’ outlook for slower but still positive growth is “contingent on only modest impacts on jobs and wages from the array of potential issues facing the economy,” Curtin concluded.