U.S. Consumers Sour on Outlook While Happy With Finances

(Bloomberg) -- The weakest U.S. consumer expectations since the election indicate growing concern about prospects for President Donald Trump’s agenda, though Americans’ high satisfaction with their finances should support continued spending, University of Michigan survey data showed Friday.

Key Takeaways

The survey shows a widening divide between how Americans view the current state of the economy and prospects for a potential extra boost from Congress and the White House, as lawmakers wrangle over health care and taxes. While 51 percent of all consumers reported recent improvement in their finances -- the highest share since 2000 -- Republicans are becoming less sanguine about the situation in Washington, according to the report.

For the first time since the election, a bigger share of consumers expected a downturn in the next five years than an uninterrupted expansion. Even so, the average level of sentiment in the first half was the best in 16 years, which supports the household spending that accounts for 70 percent of the economy.

Official’s Views

“There was a good deal of sentiment right after Trump was elected that he would get all of his programs through Congress in a reasonable amount of time,” Richard Curtin, director of the University of Michigan consumer survey, said during a conference call. “Most consumers now are thinking that he may not get them and that he may not get them in 2017.”

Other Details

• Sentiment gap between Republicans and Democrats was 39 index points in June, similar to 38-point difference in February
• Consumers saw inflation rate in the next year at 2.6 percent, unchanged from the prior month
• Inflation rate over next five to 10 years seen at 2.5 percent after 2.4 percent in May
• Households in the top third of incomes, which account for more than half of spending, reported less favorable buying attitudes for durables, vehicles and homes

--With assistance from Patricia Laya

To contact the reporter on this story: Daniel Flatley in Washington at dflatley1@bloomberg.net.

To contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Vince Golle