The Urethane Blog

Consumer Confidence Surge

Americans Shrug Off Stock Drop, Consumer Confidence Surges “Due To Tax Reform”

UMich consumer confidence surged more than expected in February’s preliminary data, as stock market gyrations were dominated by rising incomes, employment growth, and by net favorable perceptions of the tax reforms.

Indeed, when asked to identify any recent economic news they had heard, negative references to stock prices were spontaneously cited by just 6% of all consumers. In contrast, favorable references to government policies were cited by 35% in February, unchanged from January, and the highest level recorded in more than a half century.

In addition, the largest proportion of households reported an improved financial situation since 2000, and expected larger income gains during the year ahead.

The vast majority of favorable news involved changes to government tax policies and employment gains – 57% out of a total of 78%.

In comparison, the stock market was rarely mentioned, and remarkably, it was more likely to be mentioned as a favorable development (largely due to its rebound, and annual gains) than unfavorably (7% versus 6%). In comparison, following the 1987 stock market crash, a record 38% spontaneously cited stock price decline, and following the 2015 decline, 16% unfavorably cited stock prices (see last week’s report for more on stock declines). A strong economy meant that unemployment was anticipated to decline even further from its current low by 34%, the bestsince the start of 2017.

There is one black lining to this silver cloud, Home-Selling conditions reached near record highs (due to price)…