WASHINGTON, D.C.: Consumer sentiment in the United States is riding high on a tide of good economic news, despite political turmoil at home and inflamed geopolitical tensions abroad.
Analysts say consumers remain confident despite catastrophic storms, deepening political alienation, violent marches and talk of war — things that might otherwise make households cut spending and hunker down for safety—because such events are far from their day-to-day economic lives.
“In the past year, there has been a long list of issues that could have derailed consumer confidence, including the unprecedented partisan divide, North Korea, Charlottesville, as well as the hurricanes,” Richard Curtin, chief economist at the University of Michigan’s Surveys of Consumers, said Friday in a statement.
Curtin released the university’s twice-monthly index of consumer sentiment, which slipped 1.6 points between August and September but remained elevated even though three hurricanes had struck US territory in the space of a month.
“Confidence has nonetheless remained very favorable,” he said.
In the first nine months of the year, the index even hit its highest level in 17 years.
“One of the reasons Americans can be optimistic is the extent to which many of these events have not affected what they are able to do and what they are not,” Frederick Wherry, a professor of sociology at Princeton University, told Agence France-Presse (AFP).
According to Edward Berkowitz, professor of history and public policy at George Washington University, the deadly violence at a far-right march in Charlottesville, Virginia in August was “not a major enough event to influence the national psyche or interrupt economic trends.”
Consumers do have reasons to be optimistic. The economy grew by 3.1 percent in the second quarter, its fastest pace in nearly two years, and unemployment, currently estimated at 4.4 percent, is at historically low levels.
A place to ‘practice freedom’
The economic devastation of Hurricanes Harvey, which slammed into Florida and Southeast Texas in a two-week period, “was quite small and has already begun to fade,” according to Curtin.
For the fourth straight month, consumers also reported improving personal finances, he added.
Two thirds of homeowners surveyed, the highest level in ten years, also reported rising property values.
“Historically people enter the marketplace as a place for practicing our freedom,” said Wherry.
“The marketplace becomes a refuge for us here in the US.”
Confident consumers with rising incomes spend more. Consumer spending is a prime driver of growth in the world’s largest economy and Curtin estimates it will grow by 2.6 percent this year and in the first half of 2018.
But according to Berkowitz, a few weeks of rising gasoline or grocery prices could reverse the trend and “contribute to an overall sense that the economy, and the nation itself, are sputtering.”
Berkowitz said it would be wise to wait before concluding that current confidence levels are sustainable.
“I would say stick around and see what happens,” he added.
Tom Smith of the University of Chicago’s National Opinion Research Center said consumer sentiment surveys were narrowly focused and should not obscure broader public opinion.
“Given the objective economic situation and the narrow focus of the measures you mention, I am not surprised that they had generally been positive,” he told AFP.
“But the other measures tell us that these consumer confidence measures are only part of the larger picture.”
President Donald Trump’s current public approval is among the lowest of any modern US president.
“Even with a small recent uptick it is and has been low by historical standards,” Smith said.
Most American voters, or 56 percent, say Donald Trump is not fit to be president, according to a Quinnipiac University Poll released Wednesday.
Meanwhile, American society is becoming increasingly unequal.
According to a Federal Reserve survey published Wednesday, income and wealth concentrations are now at “historically high” levels.
The top one percent of households now own nearly 40 percent of all American wealth while the bottom 90 percent have seen their share decline steadily for 25 years.