Consumer Sentiment Remains High, But the Devil is in the Details

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Professor Scott Rick sees anxiety among some U.S. consumers despite an overall rosy picture.

Professor Scott Rick sees anxiety among some U.S. consumers despite an overall rosy picture.

U.S. consumers, on average, feel good about the economy and its prospects, although a closer look at the data reveals some important nuances, according to the May University of Michigan Surveys of Consumers.

Buying plans of consumers are mixed. Household durables hit a 10-year peak, while vehicle buying conditions hit a three-year low.

Scott Rick

Michigan Ross Professor Scott Rick, commenting on the survey, says the largely optimistic spending plans are likely due to favorable income expectations and heavy price discounting from struggling retailers.

But it also may reflect some anxiousness.

“We might be seeing a desire to ‘hunker down’ in anxious times,” says Rick, associate professor of marketing. “If the outside world is viewed as an increasingly anxiety-provoking place, people may be motivated to make their home more pleasant. Anecdotally, the home renovators I'm working with now report that business has been booming since the election.”

The partisan divide in expectations remains high, with Republicans more optimistic about the future. But the gap narrowed in May, mostly due to diminished fears among Democrats about a recession.

“Democrats now appear less anxious about the economy than they were when Trump took office,” says Rick. “But many other signs suggest their general level of anxiety is uncomfortably high. While their reduced economic anxiety may suggest greater willingness to spend, their mounting anxiety from many other sources may distract them from shopping. When you're on the edge of your seat, watching and worrying about news of endless political disasters and terror attacks like the one in England, you might not get around to buying what you planned to buy in calmer moments.”

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