Surge in Consumer Confidence Turns to “Dismal” Retail Sales beyond Autos, Gasoline
Pundits sent back to the drawing board.
Consumer sentiment surveys have captured the “Trump Effect” elegantly. All major sentiment surveys agree: Consumer confidence has surged since the election. The University of Michigan consumer sentiment survey, released today, at 98.1 – while down a tiny 0.1 from the miraculous post-election jump a month ago – was still the second highest in 12 years, last month having been the highest.
But there’s now an intense partisan line dividing how consumers feel about the economy.
“The post-election surge in optimism was accompanied by an unprecedented degree of both positive and negative concerns about the incoming administration spontaneously mentioned when asked about economic news,” explained the survey’s chief economist, Richard Curtin.
This partisan divide between those who favorably mentioned the policies of the next government, and those who unfavorably mentioned them reached an extraordinary gap of 42.7 points in the expectation index.
And there’s one more thing: these jumps in consumer sentiment translated into a disconcerting lack of spending over the holiday shopping season.
Sales at retailers in the US edged up a disappointing 0.6% in December, from November, on a seasonally adjusted basis, according the Commerce Department today. Excluding sales at auto and parts retailers, which account for 21% of total retail sales, and excluding sales at gas stations, which benefited from sharply higher gasoline prices, retail sales were flat.
This got pundits worried about weaker economic growth in the fourth quarter.
Note that auto and parts sales, as reported by the Commerce Department here, are survey-based estimates denominated in dollars. The monthly new vehicle sales reported early in the month by automakers are based on the new vehicles actually sold by dealers to their customers, measured in vehicles (regardless of price), not dollars.
Sales at “General merchandise” stores declined 0.5%. In this group, sales at department stores declined -0.6%. Sales at “miscellaneous retailers” fell 1%.