While the country remains mostly divided over the political climate, it seems that people are feeling better about the future of the economy. This metric, of course, is reflected in a jump in the Consumer Confidence Index, which hit 114.8 in February. According to the Conference Board, this is the highest since July of 2001.
The number is not too much of a surprise, though, as economists had expected the data to reflect a Consumer Confidence Index of 111. Economists note that consumer spending accounts for approximately 70 percent of all US economic activity.
The Conference Board director of economic indicators, Lynn Franco, comments, “Consumers rated current business and labor market conditions more favorably this month than in January.”
She goes on to say, “Expectations improved regarding the short-term outlook for business, and to a lesser degree jobs and income prospects. Overall, consumers expect the economy to continue expanding in the months ahead.”
It is important to note, however, that those who consider business conditions as “good” fell from 29 percent to 28.7; and those saying the opposite (that conditions are “bad”) fell from 15.9 percent to 13.2 percent. This means, of course, that overall, more people feel like things are improving than not improving. Essentially, the report also notes that consumers have an upbeat outlook on the labor market, too.
Still, Pantheon Macroeconomics chief economist, Ian Shepherdson, reminds that consumer confidence among adults younger than 35 actually dropped a bit in February. He reports, “It’s not hard to see why younger people, who are less likely to own stocks, more likely to have voted (for Democratic candidate Hillary) Clinton, and are more likely to rely on Obamacare than older people, would be less confident,” in a recent research report.
Indeed, Amherst Pierpont Securities chief economist Stephen Stanley notes, “Optimism is better than pessimism for sure, but I would not want to leave the impression that the sky-high confidence readings are a guarantee of anything.”
Though Republicans and Independents, in particular, remain quite hopeful about the pending economic recovery, it is not going to be easy. Sure, the US economy has expanded over the past eight years but this expansion period has been the weakest in US history with the US failing to reach 3 percent growth for a record 11 years in a row.