President Trump’s Tax Reform has Consumer Sentiment Jumps at 14-Yr Highs

President Trump’s Tax Reform has Consumer Sentiment Jumps at 14-Yr Highs

President Trump’s Tax Reform has Consumer Sentiment Jumps at 14-Yr Highs

US consumer sentiment in March unexpectedly jumped to a 14-year highs after tax cuts boosted disposable incomes, while new tariffs boosted inflation expectations and dimmed the outlook, a University of Michigan (MSI) survey showed Friday.

Highlights of Michigan Sentiment (March, Preliminary)

  • Sentiment index rose to 102 (est. 99.3) from 99.7 in February.
  • Current conditions gauge, which measures Americans’ perceptions of their finances, advanced to 122.8, highest in data back to Y 1946, from 114.9
  • Expectations measure decreased to 88.6 from 90

Key Takeaways

The advance in confidence should help underpin consumer spending, the biggest part of the US economy, after a report earlier this week showed a sluggish start to the year for retail sales.

A tightening labor market, rising home prices and tax cuts enacted in December are supporting optimism among Americans.

The direction of sentiment was split.

Respondents in the bottom 33% of household income posted a 15.7-point gain in the index, while the Top 33% recorded a 7.3-point decline.

President Donald Trump’s tariffs on imported steel and aluminum earned unfavorable mentions in the survey at roughly the same rate as favorable mentions of the tax cuts.

Tariff issues dimmed respondents’ prospects for the economy and helped raise inflation expectations, according to the report.

Respondents’ also expected gains in incomes in the year ahead fell to 1.8% from 2.2%. All of the decline in expected income gains came among respondents in the Top 33% of incomes.

Positive sentiment dominated the latest survey, as 59% of respondents cited recent financial progress, the most since the survey began in Y 1946, while the share citing income gains rose to 50 yr highs.

Official’s Views

“While income gains are anticipated by consumers, the March survey found that the size of the expected income increase returned to the lows recorded in the past year,” the director of the University of Michigan consumer survey, said in a statement.

Other Details

  • Consumers saw inflation rate in the next year at 2.9%, highest since March 2015, after 2.7% the prior month
  • Inflation rate over next 5 to 10 years seen at 2.5% for 3rd month running
  • 20% of respondents, highest since Y 1990, favored buying durable goods in advance of anticipated price increases

MAGA

Have a terrific St. Patrick’s Day

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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