(Tom Ozimek) U.S. consumer sentiment fell sharply in early August, with the University of Michigan confidence survey plumbing depths not seen in a decade as Americans expressed worry about personal finances, unemployment, and inflation.
After a mixed picture in February (expectations down, current conditions up), analysts expected a big jump in Conference Board Consumer Confidence in March… and they got it.
March Consumer Confidence exploded from 90.4 (revised lower) in Feb to 109.7 in March – the highest since March 2020.
The underlying components also smashed expectations:
Following the headline decline for Conference Board Consumer Confidence in November, analysts are expecting an exuberant bounce in December as every asset class rose majestically (despite retail sales slowing).
But, despite record high stocks, the headline consumer confidence data disappointed, printing 126.5 (down from the upwardly revised 126.8) and well below the hopeful 128.5 expected.
While the Present Situation picked up modestly, the Future Outlook weakened:
Combining for the 4th monthly headline drop in the last 5…
Interestingly, this is the 4th straight month of YoY declines in confidence…
And expectations for stock market gains also faded…
Isn’t the whole point of The Fed to pump enthusiasm up “by whatever means”?
It’s not working!
For the 29th month in a row, Americans annual spending grew faster than their incomes as the ‘no consequences’ new normal rolls on, leaving the savings rate languishing near record lows – even if it did very modestly uptick in May.
Year-over-Year income growth reached 4.0% – the highest since Nov 2015; while YoY spending growth stalled at 4.4%.
Income growth was dominated by private workers seeing another uptick…
On the month, personal incomes grew 0.4% (as expected) – the fastest rate since Dec 2017.
However, for the second straight month, month-over-month spending growth disappointed – rising just 0.2% MoM vs +0.4% expectations.
But the growth in both continues.
The PCE Inflation data came in a little hotter than expected – rising at the fastest since March 2012…
As a reminder, the vast gap between extreme high confidence and extreme low savings rate – a borrow-my-way-to-happiness narrative – has never ended well in the past…
Remember, nothing lasts forever – ask the German soccer team.
Consumer demand for housing has dropped to its lowest recorded level due to reduced confidence in financial security and income raises, a new survey from Fannie Mae says.
The government-sponsored enterprise’s March national housing survey found that 41% of Americans expect their financial situation to improve over the next year, and 22% said their income had increased substantially over the last year.
Most importantly, the percentage of respondents who said they planned to buy a home dropped five basis points to 60%, an all-time survey low.
“We’ve seen modest improvement in total compensation resulting from a strengthened labor market,” Fannie Mae chief economist Doug Duncan said in a release.
“However, income growth perceptions and personal financial expectations both eased off of recent highs, consistent with Friday’s weak jobs report. Simultaneously, the share of consumers expecting to buy on their next move has declined. Meanwhile, the wait for housing expansion continues.”