Consumer sentiment has plateaued six months after President Donald Trump’s surprise election in November.
Continue Reading Below
A final read on the University of Michigan’s closely-watched consumer sentiment gauge showed a slight decline to 97.1 from a preliminary reading of 97.7. Wall Street had expected a smaller slip to 97.5 as the gauge averaged a 97.3 level in the December to May period.
The partisan dive divide between Democrats and Republicans – which had been wide in the months after the election season – has narrowed but remains mostly unchanged, according to Surveys of Consumers chief economist Richard Curtin.
“Since no major policies, such as health care, taxes or infrastructure spending have yet been adopted, the partisan divide may reflect differences in policy preferences expressed as expected economic outcomes,” he noted.
The “extreme partisan divide,” then, is likely to continue until the president’s policy proposals either gain traction on Capitol Hill or fall by the wayside. Until then, Curtain said it’s unlikely the impact of partisanship on economic expectations will dissipate.
“Despite the expected bounce back in spending in the current quarter, personal consumption is expected to advance by 2.3% in 2017, although this is based on averages across the political divide, which has never been as extreme as it is currently,” he said.