The consumer optimism is understandable, but it may not account for Obama’s economic damage.
Bloomberg does its best to cast doubt that the consumer optimism is the result of the Donald Trump win with its headline: “Soaring Consumer Confidence: Are Americans Happy It’s Trump, or Just Happy It’s Over?”
They admit that consumer attitudes have changed sharply:
On the surface, the message from the University of Michigan’s final reading of consumer sentiment for November is that President-elect Donald Trump will fix what ails the nation — fast.
The consumer expectations index of the survey rose by 8.4 points from October to 85.2 — a one-month gain last exceeded in the December 2011 — a testament to households’ optimistic view on the outlook for the U.S. economy and their own pocketbooks.
And ‘optimistic’ might be an understatement. According to the latest report, in some cases, Americans are the most hopeful they have been in more than a decade. For the first time since 2006, 37 percent of households said they expect their personal finances to improve in 2017. Also hitting decade highs: real income expectations, as wage growth continues to gain strength in a broadening swath of the economy.
It’s not just on the personal finance front either. The index tracking households’ expectations for changes in business conditions over the next year rebounded strongly after tumbling in October, with the share calling for an improvement in this area registering its biggest one-month gain last exceeded in 2008.
So why the ambiguous headline? Why is this information characterize as a “surface” message?
According to Bloomberg reasoning, optimism caused by Trump does not make sense because of the divided election. They think that people who voted for Hillary would not have high hopes for a Trump economy.
But lots of people didn’t vote at all. That doesn’t mean they feared that a Trump economy would be bad. They probably couldn’t bring themselves to vote because of other media attacks. I would guess that even many who voted for Hillary for “moral” reasons, did not have faith that she would lead the country into prosperity.
Even some tech companies are speaking favorably about Trump despite their horrible political vision.
If a tech CEO can see a silver lining in Donald Trump’s policies, imagine what other industry leaders think.
While Trump will be better for the economy than Obama or Hillary, I’m concerned about the level of consumer optimism.
I’m worried that economic reality won’t match these dreams. The full damage of the Obama economy has not been felt yet. We are due for a recession based on all the money-printing that the Federal Reserve has engaged in over the last decade.
Consider this Fox News headline that Trump has given consumers “a green light to spend.”
Forget a white Christmas. Consumers across America are seeing green after holiday dreams have been sweetened by bigger budgets and boosted confidence levels.
Optimism about the end of a tumultuous election year and record highs on Wall Street – a run-up that’s been dubbed the “Trump rally” — have helped prime Main Street America’s pocketbooks for more robust levels of holiday spending. The National Retail Federation estimates holiday sales will grow 3.7% from last year as shoppers dole out $630.05 billion. What’s more, this year shoppers will be more focused on hunting down the best online bargains. The NRF estimates about $105 billion of that total sum will be spent online – representing a 6% to 8% increase from 2015.
Unless incomes have risen proportionately, that represents an increase in credit card use. I’m all for consumer optimism as long as it doesn’t motivate financially stupid decisions.