Earlier today, we got confirmation of what Donald Trump already told us; namely that American consumers are pretty damn confident these days.
So damn confident in fact, that the Conference Board’s confidence gauge hit its highest level since 2001 in December.
Indeed what’s not to be confident about? After all, we’re a scant three weeks away from the US being “great again.” And as long as the liberals, commies, and socialists don’t spoil it, we could be a just a few months away from “great again” in the Netherlands, France, and Germany where populist/nationalist sentiment is on the rise thanks in no small part to the likes of Geert Wilders and AfD chief Frauke Petry.
“We cannot be under any illusion,” Petry said, in the wake of the attack on a Berlin Christmas market that left a dozen civilians dead. “The milieu in which such crimes are able to thrive has been imported here systematically over the past one-and-a-half years.”
Now one would think that this kind of political uncertainty (i.e. the chance that Europe descends into some kind of 1930s-style nationalist hell) would cause consumers to think twice before giving the all clear. But apparently Trump trumps all, so to speak.
In any event, it’s also worth noting that consumer expectations tend to presage higher personal consumption expenditures (imagine that, right?).
Here’s some color from Deutsche Bank:
As the chart below indicates, improving consumer attitudes, especially with respect to the future outlook, tend to lead the year-over-year trend in real personal consumption expenditures by one quarter. Thus, we expect to see some acceleration in consumer spending over the next couple of quarters, which should be further bolstered in the back half of the year, when the Trump tax cuts are likely to begin being implemented.
That’s all well and good, but just remember this: we’re talking about a one quarter lag here. And this is likely to be one hell of an uncertain quarter…