Michigan Consumer Sentiment: May Preliminary Remains High
The University of Michigan Preliminary Consumer Sentiment for May came in at 97.07, up from the April Final reading of 97.0. Investing.com had forecast 97.0.
Surveys of Consumers chief economist, Richard Curtin, makes the following comments:
Consumer sentiment remained on the high plateau established following Trump's election, with the early May figure nearly identical with the December to May average of 97.4. The Trump bump was relatively small given that the Sentiment Index averaged 91.8 in the comparable six month period a year ago and 94.5 in the same period two years ago. The recent stability in consumer sentiment, however, masks two important underlying shifts in the components as well as in the partisan divide. More favorable income gains and low inflation meant that consumers held the most favorable real income expectations in a dozen years. Buying plans, however, were mixed: household durables rose to a decade peak, while vehicle buying conditions slipped to a three year low. Home buying conditions were viewed less favorably, but were offset by the most favorable views about home selling in more than a decade. The partisan difference in the Expectations Index is still huge, but the gap between Democrats and Republicans narrowed slightly to 55 Index points from 65 three months ago, mainly due to Democrats expressing diminished fears of an immediate recession and lessened concerns about personal financial setbacks. Overall, personal consumption expenditures are expected to advance at about a 2.3% pace in 2017. [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.
To put today's report into the larger historical context since its beginning in 1978, consumer sentiment is 14.1 percent above the average reading (arithmetic mean) and 15.5 percent above the geometric mean. The current index level is at the 87th percentile of the 473 monthly data points in this series.
The Michigan average since its inception is 85.6. During non-recessionary years the average is 87.8. The average during the five recessions is 69.3. So the latest sentiment number puts us 28.4 points above the average recession mindset and 9.9 points below the non-recession average.