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Trump's victory has consumer confidence near a 12-year high
by Myles Udland | December 9, 2016

US consumers are feeling good about Donald Trump.

The preliminary read on consumer sentiment in December from the University of Michigan released Friday showed the index rose to 98.0, just 0.1 below the measure’s 2015 peak, which was the highest since 2004.

“The surge was largely due to consumers’ initial reactions to Trump’s surprise victory,” said Richard Curtin, chief economist for the survey of consumers.

“When asked what news they had heard of recent economic developments, more consumers spontaneously mentioned the expected positive impact of new economic policies than ever before recorded in the long history of the surveys.”

Friday’s numbers add to the UMich survey’s initial reading after the election, released on November 23, which showed a spike in confidence attributed in part to the election of Trump and in part due to relief the election was over.

Other recent readings on the health of the consumer have also been positive, with the second estimate of third-quarter GDP showing personal consumption rose 2.8% during the quarter, more than initially reported. The Conference Board’s consumer confidence measure also rose to a 9-year high in July. Consumer spending accounts for about 70% of GDP.

Now, this boost in confidence doesn’t mean there aren’t consumers who don’t view Trump’s election, or the general state of play in the economy, as positive developments.

“To be sure, an equal number volunteered negative judgments about prospective economic policies, but the frequency of those negative references was less than half its prior peak levels, whereas positive references were about twice its prior peak,” Curtin said Friday.

“There were a few exceptions to the early December surge in optimism, mainly among those with a college degree and among residents of the Northeast, although no group has adopted a pessimistic outlook for the economy.”

Given the essential role consumers play in economic growth, elevated expectations for the economy in the coming years have little chance of coming to fruition without confident consumers. For now, this piece seems to be in place.

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