University of Michigan’s headline consumer confidence index slipped lower in Septemeber (prelim) from 96.8 to 95.3 driven by a tumble in ‘expectations’ that offset a burst in ‘current conditions’ to its highest since Nov 2000!
As Bloomberg reports, the figures are the first to broadly capture the effects of Harvey and Irma, which caused more than $100 billion in damage and sparked a jump in claims for unemployment benefits. According to the survey, 9 percent of respondents spontaneously said the storms would hurt the economy. The sentiment index was unchanged among consumers who didn’t mention the storms.
Across all interviews in early September, 9% spontaneously mentioned concerns that Harvey, Irma, or both, would have a negative impact on the overall economy.
Among those who mentioned the hurricanes, the Sentiment Index was 80.2…
while among those who did not spontaneously mention either hurricane, the Sentiment Index remained unchanged from last month at 96.8.
Notably the number of UMich survey respondents collapsed to a record low last month…
Consumers expected slight increases in gasoline prices and inflation, as Harvey temporarily shuttered refineries in Texas.
“Given the current resilience of consumers, recent events are unlikely to derail confidence,” Richard Curtin, director of the University of Michigan consumer survey, said in a statement.
“Nonetheless, the disruptions will cause a brief period of weakness in economic growth and employment, accompanied by increased precautionary motives that will temper spending trends.”
Policy makers don’t expect the disasters to have a long-term effect on the economy, as reconstruction later in the year should offset their negative impact on third-quarter growth.
A little over half of consumers reported improved finances for the fourth straight month, the highest percentage since November 2000.
Meanwhile, President Donald Trump is stepping up efforts to promote tax cuts that he says will benefit the middle class and boost an already-tight labor market. Most consumers said the economy had improved of late, with just one in five expecting conditions to deteriorate in the coming year. Only 25 percent of respondents expected an increase in unemployment, which is hovering near a 16-year low.