Consumer sentiment slipped by less than an Index-point from
last month. Since Trump's election, the Sentiment Index has meandered in a
tight eight-point range from 93.4 to 101.4, with the small month-to-month
variations indicating no emerging trend.
Consumers have remained focused on
expected gains in jobs and incomes as well as anticipated increases in interest
rates and inflation during the year ahead. As past expansions have shown,
rising interest rates do not suppress spending gains as long as they are
accompanied by more substantial increases in incomes.
The May survey, however,
found that consumers anticipated smaller income gains than a month or year ago,
even though they anticipate the unemployment rate to stabilize at its current
eighteen year low. Importantly, references to discounted prices for durables,
vehicles, and homes fell to decade lows.
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