Thank You Mr. Trump: Consumers Are Confident As Hell

I’m really not sure why the Conference Board even bothered with the latest reading on consumer confidence. I mean really, all you needed was the tweet shown above to know how the nation is feeling, right?

In fact, why don’t we just eschew the data altogether and collectively tune in to the new president’s Twitter feed at prespecified times? Trump could then just wet his finger, stick it in the air, and tell us which way he thinks the proverbial wind is blowing.

Well despite Trump’s early read on the nation’s mood, some folks still wanted confirmation from the actual numbers and wouldn’t you know it, the American consumer is confident as hell.  U.S. December consumer confidence rose to 113.7 easily besting consensus expectations.

To put this in context, we’re now sitting at the highest levels we’ve seen since 2001.

(Chart: Barlcays)

Here’s Barclays with the wrap:

The Conference Board’s index of consumer confidence rose to 113.7 in December (previous 107.1), extending the previous month’s gains. Although we were expecting confidence to improve further this month, the outturn was significantly higher than expectations (Barclays/consensus: 108.5). Consumer confidence reached a fresh post-recession high, driven by a significant rise in consumer expectations (105.5, previous: 94.4; Figure 1). The present situation index, though, declined in December (126.1, previous: 132.0). The labor market differential, which measures the net share of consumers that saw employment as plentiful, eased lower to 4.4 (previous: 6.6), but it remains higher than the long-term average. On the whole, today’s report suggests that household confidence remains on a strong footing, and we view this as constructive for consumer spending in Q4.

Before you get too excited, remember that the consumer confidence/economic policy uncertainty relationship looks to be out of sync with historical precedent:

(Chart: PIMCO)

Finally, here’s PIMCO with a gentle warning:

In our view, it’s too early to say with conviction how post-election animal spirits will evolve. However, based on equity and bond market moves since the election, we wonder if market participants – like business and consumer survey respondents – may be too focused on Trump’s pro-growth policies and not focused enough on the more controversial aspects of his agenda.

Umm, yeah. I’d say that’s an understatement. In fact, given their tone, you almost wonder if PIMCO is being patronizing on purpose on the assumption that anyone silly enough to believe these numbers are in any way a reflection of global political risk simply won’t get that the joke’s on them.

According to the Conference Board’s website, anyone with “questions” (so I guess that counts anyone who wants to call bullsh*t) can contact Carol:

Carol Courter at +1 212 339 0232 carol.courter@conference-board.org

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Here’s the full press release from the Conference Board: 

The Conference Board Consumer Confidence Index^®, which had increased considerably in November, posted another gain in December. The Index now stands at 113.7 (1985=100), up from 109.4 in November. The Expectations Index increased sharply from 94.4 to 105.5, but the Present Situation Index decreased from 132.0 last month to 126.1.

The monthly Consumer Confidence Survey^®, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch. The cutoff date for the preliminary results was December 15.

“Consumer Confidence improved further in December, due solely to increasing Expectations which hit a 13-year high (Dec. 2003, 107.4),” said Lynn Franco, Director of Economic Indicators at The Conference Board. “The post-election surge in optimism for the economy, jobs and income prospects, as well as for stock prices which reached a 13-year high, was most pronounced among older consumers. Consumers’ assessment of current conditions, which declined, still suggests that economic growth continued through the final months of 2016. Looking ahead to 2017, consumers’ continued optimism will depend on whether or not their expectations are realized.”

Consumers’ assessment of current conditions declined in December. Those saying business conditions are “good” decreased slightly from 29.7 percent to 29.2 percent, while those saying business conditions are “bad” increased from 15.2 percent to 17.3 percent. Consumers’ appraisal of the labor market was less positive than last month. Those stating jobs are “plentiful” declined from 27.8 percent to 26.9 percent, while those claiming jobs are “hard to get” increased from 21.2 percent to 22.5 percent.

Consumers’ short-term outlook improved considerably in December. Those expecting business conditions to improve over the next six months increased from 16.4 percent to 23.6 percent, while those expecting business conditions to worsen declined from 9.9 percent to 8.7 percent.

Consumers’ outlook for the labor market also improved markedly. The proportion expecting more jobs in the months ahead increased from 16.1 to 21.0 percent. However, those anticipating fewer jobs also increased, from 13.5 percent to 14.0 percent. The percentage of consumers expecting their incomes to increase rose from 17.4 percent to 21.0 percent, while the proportion expecting a decrease fell moderately, from 9.2 percent to 8.6 percent.