Despite all the political rancor going on in the U.S., consumer sentiment among consumers increased in May based on preliminary data from the University of Michigan’s consumer sentiment index.
According to a report in The Financial Times Friday (May 12), the index came in at 97.7 in May, higher than the 97 economists surveyed by Bloomberg were looking for. It’s also higher than the 97 reached in April, marking a 0.7 percent month over month increased and a 3.2 percent rise from May of last year.
Richard Curtin, Survey of Consumers chief economist, told the FT that there is still a big difference between Republicans and Democrats when it comes to consumer sentiment but that it narrowed a little bit to 55 from the 65 recorded three months ago. Curtin said that this was largely due to “Democrats expressing diminished fears of an immediate recession and lessened concerns about personal financial setbacks.”
In the latest survey, Curtin said the reason the sentiment picked up is because consumers have high real-time income expectations, reaching levels not seen in more than a decade with incomes increasing and inflation still low. That doesn’t mean consumers are spending as a result. Vehicle buying conditions hit a three-year low, while home buying conditions were also lower. Home-selling sentiment reached its most favorable point in more than 10 years, noted the report.
Ever since the U.S. election, Republicans and Democrats have been divided over the impact President Trump will have on the economy. Heading into Trump’s presidency, there were concerns of a recession in the U.S. and a crash of the stock market, but that hasn’t happened. Unemployment is hitting record lows, the stock market has been rallying and Trump has been taking credit for job creation, all of which helps consumer sentiment.