U.S. Consumer Economic Expectations Remain High, Tax Reform Seen as Having Positive Impact

English actess Jane Asher window-shopping with British actor Gawn Grainger in New York City, 21st February 1967. (Photo by Harry Benson/Daily Express/Hulton Archive/Getty Images)
Harry Benson/Daily Express/Getty Images

Consumer expectations for future economic conditions remained strong in January but the end of holiday sales weighed on assessments of buying conditions for household durables such as washing machines and refrigerators.

The University of Michigan’s consumer sentiment index unexpectedly ticked slightly downward Friday, falling to from 95.9 in December to 94.4 in January. Economists had forecast a rise to 97.

The measure of expectations rose to 84.8 from 84.3, indicating that American consumers remain optimistic about their economic future. But the current conditions gauge pushed the overall index down. At 109.2, the current conditions measure is now at the lowest point since Donald Trump’s election.

But this decline in the assessment of current conditions was driven by a decline in the favorability of buying conditions for durable household goods. Consumer assessments of personal finances and buying plans, however, remain strong, according to the University of Michigan.

Tax reform got rave reviews. Around one-third of consumers spontaneously mentioned tax reform in the survey. Of those, 70 percent said the impact would be positive. Just 18 percent expected it to be negative. That suggests that consumers who have the greatest awareness of tax reform are far more positive about it than surveys of the broader public suggest.

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