And still they spend – and still, the outlook may be bright.
If sentiment is everything – where sanguine moods can mean the difference between action and inaction – perhaps the stage is set for continued spending by the U.S. consumer.
As reported on Friday (Sept. 13), preliminary data from the University of Michigan shows that sentiment rebounded more than expected, up to 92 from 89.8 in August (itself an eight-point drop from July), and better than the 91 reading that had been expected. The overall boost comes despite worries over the lingering trade war between China and the United States, according to the survey and as reported by CNBC. The data shows that 38 percent of consumers referenced worries about tariffs.
Richard Curtin, chief economist for the Surveys of Consumers, said the respondents polled for the survey made “spontaneous references to the negative impact of tariffs, the highest percentage since March 2018. Those who negatively mentioned tariffs also held more negative views on the overall outlook for the economy, as well as anticipated higher inflation and unemployment in the year ahead.”
In another reading, the current economic conditions showing was 106.9, up from 105.3.
Those worries have not dented a propensity to spend. Also in data reported Friday, retail sales were up 40 basis points in August as measured against the prior month. The data from the Commerce Department was better than the 20-basis-point gain expected. Stripping out the impact on gas and at restaurants, among other items, spending was still strong, up 30 basis points.
Now, sentiment can be buffeted about by the vagaries of the trade war, which seems nothing short of mercurial. Tariffs are on, they are off, they may be delayed as gestures of goodwill. It may be the retail sales numbers that show consumers are, in a way, putting their money where their mouth is, so to speak.
And it seems they are not all that worried that retailers will jack up prices if their supply chains/input costs become more expensive should the trade war linger – given the fact that, overall, retail sales were up 4.1 percent from a year ago, and have been on the upswing for six months. That is the longest consecutive run in two years.
What might the breaking point be? It seems beyond the horizon, at least further out as we head into the all-important holiday spending season.
For now, color the consumer watchful, but not wary.