The first post-election economic numbers are in, and we’re learning that US consumers are excited about Donald Trump.
“The initial reaction of consumers to Trump’s victory was to express greater optimism about their personal finances as well as improved prospects for the national economy,” said Richard Curtin, chief economist for the University of Michigan’s survey of consumers released Wednesday.
“The post-election gain in the Sentiment Index was +8.2 points above the November pre-election reading, pushing the index +6.6 points higher for the entire month above the October reading,” Curtin added.
The survey’s headline sentiment reading came in at 93.8 for November’s final reading, better than the 91.6 expected by Wall Street economists. The month’s preliminary reading hit 91.6, up from 87.2 in October.
This reading also comes right on the edge of the all-important holiday shopping season. Analysts at Wells Fargo said earlier this week they expect holiday spending to rise 3.8% this year, more than than the 2.9% increase we saw a year ago.
“The post-election boost in optimism was widespread, with gains recorded among all income and age subgroups and across all regions of the country,” Curtin said.
“The upsurge in favorable economic prospects is not surprising given Trump’s populist policy views, and it was perhaps exaggerated by what most considered a surprising victory as well as by a widespread sense of relief that the election had finally ended.”
This reading marked the first consumer sentiment survey that captured reactions to the presidential election. In a note to clients out Tuesday, economists at Deutsche Bank argued that surveys like this one — as well as business sentiment readings — would carry more weight in the coming months.
Wednesday’s consumer survey adds to the confidence we’re seeing from the investor class, which has clearly cheered Trump’s election. Stocks closed at record highs on Tuesday, with the Dow crossing the 19,000 threshold for the first time, extending their so-called “Trump Rally.”
“To be sure, no surge in economic expectations can long be sustained without actual improvements in economic conditions,” Curtin added.
“Presidential honeymoons represent a period in which the promise of gains holds sway over actual economic conditions. Presidential honeymoons, however, can quickly end if they are unaccompanied by prospects that economic conditions will actually improve in the future. President-elect Trump appears to appreciate the importance of his first hundred days; the key issue is whether his economic policies will resonate with the nation’s consumers.”
Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland
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