Consumer Sentiment Turns Positive Again

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The Morning Consult index of consumer sentiment pulled back slightly from a 52-week high set in the final week of December. As of January 19, the consumer index score was 113.9, down from the 114.8 score at the end of 2019.

Morning Consult did not report on the index last week but noted in this week’s summary that the overall sentiment index rose by 1.1 points. That implies that the score dropped to 112.8 in the previous week. 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, 2019.

The gap between the index’s component scores widened slightly in the week ending January 19, with the future expectations score rising by 1.1 points to 114.5 and the current conditions score rising by 0.8 points to 113.1.

According to Morning Consult, “While investors and consumers view the economy differently, the long-term prospects for corporate profitability depend on the strength of consumers.” The implied drop between the end of December and the week ending January 12 is likely due to tensions over the U.S. drone attack that killed Iranian Lieutenant General Qasem Soleimani and the Iranian missile attack that followed.

The analysts also note a convergence among investors and consumers: “Investors and consumers currently share positive economic outlooks, boding well for continued growth in consumer spending and corporate profits.”

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 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 0.4 points from the previous week. Among households with income between $150,000 and $200,000, the overall score rose by 3.8 points, and overall sentiment among households with incomes between $200,000 and $250,000 rose by 1.6 index points to post a score of 126.4. Households with incomes over $250,000 posted a rise of 1.1 index points to 130.5.

By industry, Americans employed in retail trades reported a gain of 2.6 points to 119.4, with construction workers posting a gain of 3.6 points to an index score of 129.1. Consumer confidence in the agricultural sector fell by 2.9 points to 119.9, reflecting “industry-specific conditions.”

Top executives posted a 2.4-point rise in overall sentiment for a score of 125.7. Sentiment among CEOs leading businesses with more than 100 employees fell by 4.7 points to 151.4, while sentiment among CEOs of business with 21 to 100 employees saw a 0.5-point decrease to 132.1. Top executives at businesses with one to five employees posted an index score of 119.5, up by two points week over week.

Looking at responses to questions about future economic conditions, top executives of companies with more than 100 employees posted an index score of 152.8, down by 6.1 points week over week. At companies with one to five employees, executives raised the score by 2.1 points to 126.9. A recent PricewaterhouseCoopers survey found that most CEOs expect a global economic downturn this year.

Morning Consult indicated that company executives’ opinion of current economic conditions rose by 2.9 points last week, with the index score rising to 123.9, equal to the 52-week high.

While U.S. consumers remain mostly optimistic about the economy, there remain many places in the United States where the American Dream is dead.

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