It could’ve been worse.
That was one way to look at the latest read on the US consumer, who’s currently struggling to make peace with the highest inflation in 40 years. Not to mention the distinct possibility that even if a tight labor market makes it possible to extract higher pay from employers, the “extra” money won’t be enough to offset surging prices for everything from gas to food to clothes.
Although the Conference Board’s gauge ticked lower from December (figure below), January’s print (113.8) was better than the 111.2 consensus expected. Considering the circumstances, it was a benign report.
The present situation gauge actually improved from December despite America’s objectively challenging “present situation,” defined as it is by the highest inflation in decades and the persistence of a viral scourge.
That said, expectations deteriorated meaningfully. Notwithstanding the near five-point drop on the forward-looking index, Lynn Franco, Senior Director of Economic Indicators at The Conference Board, noted that “the proportion of consumers planning to purchase homes, automobiles and major appliances over the next six months all increased.”
Further, inflation worries receded for a second month even as they’re still near a 13-year high.
You might juxtapose the above with the University of Michigan survey, which is sitting near a decade low. The final read on the Michigan gauge is due Friday.
Note that the stocks aren’t fine anymore (figure below).
“Thankfully,” most Americans don’t own any equities to speak of, so average people aren’t likely distraught amid the ~11% pullback in the S&P.
Weighing in further Tuesday, Franco cautioned that “looking ahead, both confidence and consumer spending may continue to be challenged by rising prices and the ongoing pandemic.”
That’s consumers for you. A mercurial, testy bunch. Always fretting over things like expensive electricity and deadly viral pneumonia. Just wait until they hear about the Fed-driven recession.
““Thankfully,” most Americans don’t own any equities to speak of, so average people aren’t likely distraught amid the ~11% pullback in the S&P.” I assume the “Thankfully” is Franco. Kinda has a Marie Antoinette ring to it.
“The proportion of consumers planning to purchase homes, automobiles and major appliances over the next six months all increased”, isn’t that what we’re told people do when they are resigned to accepting inflation is going to make goods more expensive going forward? I’m going with more weight on the “13 year high” part for now.
The political consequences from the depleted, rapidly depleting, and soon to be depleted human-capital set may be brutal this mid-term. The Depleteds reliably vote.