Consumer Sentiment on Track to Keep Rising

Paul Ausick

Consumer sentiment rose to a six-week high last week, according to the latest report from Morning Consult. Based on the firm’s daily survey of some 7,500 U.S. adults, overall consumer sentiment reached an index score of 109.3 for the week ended November 3. The 52-week high index was posted on November 5 of last year at 112.6, and the 52-week low of 104.5 was seen on January 21.

The better news, perhaps, is that survey respondents who are C-suite executives have regained confidence in the U.S. economy and are expected to invest more in their businesses during the final quarter of 2019 and the early part of 2020. Business confidence was weak during the summer, causing business decision-makers to delay investment.

Less cheerful news is that consumers’ views of their current financial conditions deteriorated in October to an index score of 99.8, a level it hasn’t reached since late January. The consumer current conditions index posted a 52-week high of 104.3 last July 29 and a 52-week low of 97.0 on December 17, 2018.

According to Morning Consult, “wage gains remain weak, and a decreasing percentage of consumers feel better off financially than they were 12 months ago. Consumers’ views of their current financial condition is the only component of confidence that decreased throughout October.” These are the cities where incomes are shrinking the fastest.

Morning Consult asks the same questions of its survey respondents as does the University of Michigan’s twice-monthly Survey of Consumers. The difference is in the number and method of the survey. The Michigan sentiment index is based on 600 telephone interviews with U.S. adults, while Morning Consult’s results are based on an ongoing survey from 7,500 daily interviews and 210,000 monthly interviews, all conducted online.

The survey breaks down the data it collects by some key demographic groups. Here are some of the results of that breakdown.

Respondents who earn $250,000 or more in household income posted a week-over-week change in overall sentiment of 6.7 points to an index score of 125.6. Respondents who earn between $50,000 and $100,000 posted a sentiment score of 115.1, unchanged week over week. Respondents who earn less than $50,000 had an index score of 104.5, up 0.1 points week over week, but still the lowest overall score by income. Here are the counties with the widest income gaps.

C-suite executives at companies with 21 to 100 employees boosted their overall sentiment index score by 10.3 points last week to 135.0. The largest companies (with 101 or more employees) had the highest index score at 146.3, up 0.7 points week over week.

Survey respondents who voted for Donald Trump in 2016 posted an overall sentiment score of 138.3, up 0.9 points week over week, while Hillary Clinton voters posted an index score of 86.9, up 0.1 points. People who voted for another candidate had an index score of 96.8, down by 1.6 points week over week. Here are the states with the best and worst economies.

High-income respondents ($250,000 or more) had the highest index score for future expectations at 120.0, up 6.1 points week over week.

Respondents with less than a college degree posted a gain of 0.8 index points on the future expectations question to a score of 112.2, while college degree holders posted a dip of 1.6 points to an index score of 107.6.

Respondents with household incomes of $150,000 to $200,000 dropped 3.0 points from their current conditions index score to post a 126.9, while high-earnings ($250,000+) posted a gain of 7.6 points to 134.0. People earning less than $50,000 slipped 0.2 points to a current conditions score of 101.5, the lowest in this demographic.

Responding to the question of expectations for their personal finances over the next 12 months, high-income respondents posted an index score of 137.9, up 9.0 week over week. The lowest earners expect a decline of 0.5 points to an index score of 125.1.

On the question of current buying conditions, high earners added 4.9 points week over week to post an index score of 129.4, while the lowest earners added 0.3 points to reach a score of 113.1. Based on income, every demographic group posted an increase or remained unchanged last week.

Noting that “[c]onsumers have historically been more skeptical of trade progress than Wall Street,” Morning Consult said that whether or not the United States imposes more tariffs on Chinese goods come December 15 is the “greatest uncertainty facing consumers.” The Trump administration’s comments on a possible deal with China “could further strengthen consumers’ animal spirits this holiday shopping season,” the firm concluded.