Michigan Consumer Sentiment: April Final Continues Positive Trend

The University of Michigan Final Consumer Sentiment for April came in at 97.0, up fractionally from the March Final reading of 96.9. Investing.com had forecast 98.0.

Surveys of Consumers chief economist, Richard Curtin, makes the following comments:

Consumer sentiment continued to travel along the high plateau established following Trump's election, with only minor deviations from its five month average of 97.4. There was widespread agreement among consumers on their very positive assessments of the current state of the economy as well as widespread disagreement on future economic prospects. Although the partisan divide has slightly narrowed in recent months, it still reflects a very pessimistic economic outlook among Democrats and a very optimistic outlook among Republicans. The partisan divide on the Expectations Index was 51.0 points in April (61.4 vs. 112.4), down from last month's 63.1 (59.4 vs. 122.5), with Republicans moderating their optimism more than Democrats reduced their pessimism. Selective perception of news is the driving force behind the partisan divide. Favorable economic developments were cited by nearly all Republicans in April, while three-quarters of Democrats reported hearing negative news about the economy. It is of some interest to note that the Expectations Index among self-identified Independents, who may be less susceptible to traditional political ideologies, rose to a very favorable 91.3 in April, up from March's 85.8 and well above the pre-election October reading of 73.1. The level of optimism among Independents, who account for 42% of all consumers, points toward continued growth in consumer spending in 2017 at about a 2.5% pace. Nonetheless, the partisan extremes will continue to add uncertainty and instability to consumer spending during the year ahead. [More...]

See the chart below for a long-term perspective on this widely watched indicator. Recessions and real GDP are included to help us evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy.

Michigan Consumer Sentiment

To put today's report into the larger historical context since its beginning in 1978, consumer sentiment is 13.3 percent above the average reading (arithmetic mean) and 14.7 percent above the geometric mean. The current index level is at the 86th percentile of the 472 monthly data points in this series.

The Michigan average since its inception is 85.6. During non-recessionary years the average is 87.7. The average during the five recessions is 69.3. So the latest sentiment number puts us 27.7 points above the average recession mindset and 9.3 points below the non-recession average.