U.S. consumers are feeling great about the economy right now.
And according to the University of Michigan’s latest check on consumer sentiment, the average American thinks the economic situation right now is “as good as it gets.”
On Friday, the UMich survey showed the consumer sentiment index hit 101.1, the highest level for the reading since the start of 2004. This tops the highs this index hit after the election, when both business and consumer sentiment surveys showed broad optimism in the wake of President Donald Trump’s election win.
“While the early October surge indicates greater optimism about the future course of the economy, it also reflects an unmistakable sense among consumers that economic prospects are now about as good as could be expected,” said Richard Curtin, chief economist for the survey.
“This ‘as good as it gets’ outlook is supported by a moderation in the expected pace of growth in both personal finances and the overall economy, accompanied by a growing sense that, even with this moderation, it would still mean the continuation of good economic times,” Curtin added.
Bouncing back from hurricanes
The UMich sentiment data also followed retail sales figures for September released early Friday morning, which showed retail sales rose by 1.6%, the most since March 2015. This jump was aided by a boost in spending on cars after vehicles were lost to both hurricanes Irma and Harvey.
Andrew Hunter at Capital Economics said the retail sales report, “provides further evidence that the economy is bouncing back from the disruption caused by the hurricanes.”
The UMich survey, which is a preliminary reading on confidence in October, thus adds credence to the idea that after September economic data were negatively impacted by the hurricane — take, for instance, last week’s disappointing jobs report — the economy remains in a strong position to rebound.
And while the strong consumer sentiment reading could raise alarm bells among those who see surging confidence as a harbinger of pre-downturn excesses building in the economy, Curtin said this strong reading, “is independent of the ultimate length of an expansion.”
“Indeed, nothing in the latest survey indicates that consumers anticipate an economic downturn anytime soon,” Curtin said, “which contrarians may consider a clear warning sign of trouble ahead.”
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