This was the strongest year for consumer sentiment in the twenty-first century.
The University of Michigan said Friday that on average consumer sentiment in 2017 was at its highest level since 2000. Low unemployment and stronger than expected economic growth have helped boost U.S. household optimism about the economy.
December registered a small decline in consumer sentiment, the University of Michigan said. The index slipped to 95.9, down from 98.5 and 100.7 in October, which as the highest reading since 2004.
Americans are still very happy with current economic conditions. The index tracking current conditions ticked up a bit in December to 113.8 from 113.5. But the index for expectations about the future fell to 84.3. This was 88.9 in November.
The tax debate played a role in depressing economic expectations, according to the survey’s chief economist, Richard Currin. The survey detected a partisan split on what the effects of the tax cuts will be on the economy. That likely reflects the fact that many Americans falsely believe their taxes will increase under the new law.
This will likely turn around when Americans see that their taxes are actually falling. A decline in the amount withheld by the government will grow paychecks starting in February.
“Most consumers will know more about the revised tax code when the new paycheck withholding amounts take effects in early 2018,” Currin said. “While mostly small gains in take-home pay may not spark an uptick in optimism, those gains would act to dampen renewed pessimism.”