The Morning Consult index of consumer sentiment rose to 112.7 last week for its 10th consecutive week-over-week gain. The last time consumer sentiment reached these levels was early in 2018, and last week’s score was the highest this year.
The index is based on the firm’s daily survey of some 7,500 U.S. adults and is higher than it was at this time last year. The 52-week low of 104.5 was posted on January 21.
The gap between the index’s component scores narrowed slightly in the week ending December 22, with the future expectations score rising by 0.5 points to 113.5 and the current conditions score rising by 0.6 points to 111.4.
According to Morning Consult, strong consumer sentiment coupled with November’s income gains “indicate that consumers are both willing and able to make purchases this holiday season.” The analysts note that at this time last year, consumer confidence was in the tank and led to “abysmal holiday shopping figures.” The federal government shutdown that began on December 22, 2018, probably had a lot to do with the plunging index score.
The firm’s outlook for 2020 is tempered: “While the story from the consumer is increasingly positive heading into 2020, the outlook for U.S. business investment remains worrisome. Business investment has historically increased in response to strong consumer spending, but businesses appear more cautious this time around. Businesses need to feel confident that their investments will pay off, which means that all eyes will remain on the purchasing power of the U.S. consumer next year.”
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 of respondents 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 comprising 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.
Households with income of less than $50,000 annually posted an overall sentiment score of 107.4 last week, up 1.0 points from the previous week. Among households with income between $150,000 and $200,000, the overall score rose by 0.1 points, and overall sentiment among households with incomes between $200,000 and $250,000 fell by 1.3 index points to post a score of 128.3. Households with incomes over $250,000 posted a jump of 4.7 index points to 131.3.
Among African Americans, overall sentiment rose by 0.5 points to 111.2, while rising by 2.7 points to 116.1 among Hispanics.
By industry sector, the educational services industry posted the largest week over week gain, up by 3.4 points to 111.8. Sentiment among retail trade workers fell by 1.3 points to 117.3, while sentiment fell by 2.3 points in the health care industry.
Top executives posted a 2.1-point drop in overall sentiment for a score of 121.1. Sentiment among CEOs leading businesses with more than 100 employees jumped by 7.5 points to 157.5. while sentiment among CEOs of business with 21 to 100 employees saw a 7.5-point dive to 126.9. Top executives at businesses with one to five employees posted an index score of 113.5, down 4.6 points week over week.
Looking at responses to questions about current economic conditions, top executives of companies with 21 to 100 employees posted an index score of 131.2, down 2.4 points week over week. At companies with more than 100 employees, executives lifted the score by 10.5 points to 159.5.
Manufacturing workers’ view of the current economy rose by 0.4 points last week to 123.6, while workers in agriculture added 7.3 points to their index score, sending it to 123.2.
Company executives are also slightly more downbeat about current conditions, lowering their index score by 0.9 points to 118.9, but still within a couple of points of the 12-month high.
When asked about 12-month expectations for their personal finances, Americans between the ages of 35 and 44 shaved 2.8 points from their index score to post a score of 137.5, closer to that of the 18- to 24-year-olds, who posted a score of 142.7. These millennials are far more optimistic than boomers, who posted an index score of 108.8.
Looking at the recent announcement of a trade deal with China, Morning Consult commented, “With over a week to digest the news, U.S. consumers are only marginally more optimistic about the economy after the 12/13/19 announcement of the phase-one U.S.-China trade deal. There has yet to be a dramatic jump in daily consumer confidence, and consumers do not expect the deal to boost their personal finances.”
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