Stable U.S. economy is the word of the day. Barring unforeseen events like a global coronavirus plague, a Mid-East war, a successful impeachment or another shortage of Popeye’s chicken sandwiches, it appears the economy will continue to chug along at a heathy pace through the 2020 elections.
Stable, or slightly increased, consumer confidence is the driving force. Consumer spending represents close to two-thirds of the U.S. economy. When personal wallets snap shut, economic growth shuts down, notes Robert McKinley, Senior Analyst of CardWeb.
National Consumer Confidence
According to the Conference Board Consumer Confidence Index, consumer confidence increased for the second consecutive month in January. Those claiming business conditions are “good” increased from 39.0% to 40.8%, while those claiming business conditions are “bad” decreased, from 11.0% to 10.4%.
Consumers’ appraisal of the job market also improved. Those saying jobs are “plentiful” increased from 46.5% to 49.0%, while those claiming jobs are “hard to get” declined, from 13.0% to 11.6%. The proportion expecting more jobs in the months ahead increased from 15.5% to 17.2%, while those anticipating fewer jobs declined from 13.9% to 13.4%. Regarding their short-term income prospects, the percentage of consumers expecting an improvement declined from 22.7% to 22.0%, while the proportion expecting a decrease was virtually unchanged at 7.7%.
Lynn Franco, Senior Director, Economic Indicators, at The Conference Board says: “Optimism about the labor market should continue to support confidence in the short-term and, as a result, consumers will continue driving growth and prevent the economy from slowing in early 2020.”
Another prominent monthly report, the Surveys of Consumers, by the University of Michigan, found consumer sentiment remained virtually unchanged in early January, differing by just 0.2 Index-points from December. This stability extended to all components, both current assessments as well as future economic prospects.
Chief Economist Richsrd Curtin of the University of Michigan says consumers will continue to sustain the expansion due to their favorable judgements about their current and prospective financial situation. Of course, whether that strength will last another two years is uncertain, given that the election season has only begun and features fundamental changes in taxes and spending programs that directly affect consumers.
National Business Sentiment
The NFIB Small Business Optimism Index revealed business owner optimism edged down in January from the prior month. Nevertheless, small business optimism ended the year historically strong.
“December marked the end of another banner year for the small business economy, as owners took full advantage of strong consumer spending, and federal tax and regulatory relief,” said NFIB Chief Economist William Dunkelberg. “2020 is starting out with a solid foundation for continued growth, two-years into the Tax Cuts and Jobs Act that’s providing fuel to grow small businesses and their workforce.”
Although the NFIB Uncertainty Index rose 8 points in November to 80, owners expecting better business conditions increased 3 points to a net 16%. A net 9% of all owners (seasonally adjusted) reported higher nominal sales in the past three months, 3 points above the average reading for 2019. The net percent of owners expecting higher real sales volumes increased 3 points to a net 16% of owners, bouncing back from November’s weak reading. Actual sales volumes are strong, and owners are a bit more certain of future sales growth.
Florida Consumer Confidence
Consumer sentiment among Floridians increased in December by seven-tenths of a point to 100.1 from November’s revised figure of 99.4. Similarly, consumer sentiment at the national level increased in December.
Among the five components that make up the Florida Consumer Sentiment Index by the University of Florida, three increased and two decreased.
Florida began 2019 with high levels of consumer confidence. April 2019 reported the highest level in the last 17 years, contributing to an average of 98.9 in the first half of the year. Consumer sentiment dropped significantly in August due to the ongoing trade war with China, and the average consumer sentiment fell to 97.6 in the second half of 2019.
“Notably, the average consumer sentiment in 2019 is one-tenth of a point lower than last year’s average. Despite this slight decline in 2019, overall, consumer sentiment among Floridians remains high,” said Hector H. Sandoval, director of the Economic Analysis Program at UF’s Bureau of Economic and Business Research.
Professor Cardworthy says the one thing common in all three of the consumer surveys is impeachment had a negligible impact on the overall level in consumer sentiment and cited by only 1%.
As further noted by the University of Michigan, during the Clinton impeachment, sentiment similarly rose: the Sentiment Index rose from 100.5 in the December 1998 survey when the House voted for impeachment, to 108.1 in February 1999, when the Senate voted to clear Clinton.
Sources: Conference Board; University of Michigan; University of Florida; NFIB; CardData; RAM Research; CardTrak; CardFlash; Cardworthy; CardWeb; PYRPTS; CardBuzz; Bankcenter; PYVNTS; Ruebud Media; Red3 Media