Economy Watch: Consumers More Jittery About the Future

Confidence in future U.S. economic prospects continued to decline in July, according to the University of Michigan's latest consumer confidence survey.

Source: University of Michigan Surveys of Consumers, July 2017
Source: University of Michigan Surveys of Consumers, July 2017

Americans are a little more nervous about the direction of the economy now than they were immediately after the election. According to the latest report on consumer confidence by the University of Michigan, confidence in future economic prospects continued to slide in early July, with the report’s Expectations Index now 10.1 points below its January 2017 peak.

Even so, consumers still feel reasonably good about the way things are now. Their assessment of current economic conditions regained its March 2017 peak in May, which also happens to be the highest level since the July 2005 survey.

Cyclical Patterns

Overall, recent data follow the same pattern that’s repeatedly recorded around past cyclical peaks, noted Surveys of Consumers Chief Economist Richard Curtin. Namely, expectations start to post significant declines while assessments of current economic conditions continue to reach new peaks. That said, the data do not suggest an impending recession.

Instead, the economy will probably continue along with just above 2 percent GDP growth in 2017. Much steeper declines in expectations typically precede recessions. Also, there will likely be an annual gain of 2.4 percent in personal consumption during 2017, the report said. That’s relatively good news for retailers, though a fair chunk of the growth will probably fuel online purchases, rather than traditional shopping.