Americans Adopt Dire View Of Own Financial Prospects
Americans are the most pessimistic about their personal finances in more than a half-decade.
That was one takeaway from the final read on the September vintage of the University of Michigan's consumer sentiment survey.
"The proportion of households who expected to be better off financially in a year fell to 30% in September, the lowest level since August 2016," chief economist Richard Curtin said Friday.
The headline print on the sentiment index moved slightly higher from the preliminary re
Interesting that “expect better off 5 yr” has always been well below 50% and “expect real income gains” has always been well below 30%, even during the height of pandemic spending and house buying volumes.
Below link reports change in spending and income 2018+19 to 2019+20 by income quintile. Note what each quintile spends on. Truly discretionary spending, i.e. most of what is reported as “retail spending”, is a small part of total household spending.
As such, I suspect the largest part of changes in household spending is explained by changes in non-discretionary spend (housing, transportation, food) which are in large part “forced on” households. The discretionary spending is the small remainder, and I suspect changes in discretionary spending is explained as much by how much income is left over (i.e. changes in income less non-discretionary spend) as by consumer sentiment (optimism or pessimism).
https://www.bls.gov/news.release/pdf/cesmy.pdf
Put another way, if rent-gas-food are going up [down] and if income is going down [up] likely has as much or more effect on whether discretionary spending goes down [up], as consumers’ sentiment.
No proof for the above, just my hypothesis. But in all the years I traded retail stocks, I didn’t find consumer sentiment surveys to be a reliable predictor for same store sales; so I am pre-disposed to think that other things are larger factors.