UMich confidence is stable at its post-Trump plateau for now, but the partisan divide between Republicans (robust economic growth ahead) and Democrats (recession looms) has never been wider. However, one thing they all agree on is that for the first time since the peak of the housing market in 2006, home-buyers are negative on home prices with home-sellers most dominant since 2005.
The current conditions dropped but hope rose once again…
As UMich'sRichard Curtin notes, Consumer sentiment has continued to move along the high plateau established following Trump’s election. The final May figure was virtually unchanged from either earlier in May or the April reading. Indeed, the May figure was nearly identical with the December to May average of 97.3.
Moreover, the partisan divide between Democrats and Republicans has also remained largely unchanged, with the first expecting a recession and the other more robust economic growth. How long will economic expectations be dominated by partisanship? Unlike differences in expectations across age, education, or income groups, which usually reflect actual differences in prospects for employment and income expectations, for example, partisanship is reflected by economic policy preferences. Since no major policies, such as healthcare, taxes, or infrastructure spending have yet been adopted, the partisan divide may reflect differences in policy preferences expressed as expected economic outcomes. Thus, the extreme partisan divide may persist until passage is deemed either inevitable or impossible. While extremes may well narrow, it is unlikely that the impact of partisanship on economic expectations will disappear.
Despite the expected bounce back in spending in the current quarter, personal consumption is expected to advance by 2.3% in 2017, although this is based on averages across the political divide, which has never been as extreme as it is currently.
Selective perception of economic news still dominates. Favorable news about recent economic developments were reported by 84% of Republicans but just 37% of Democrats; unfavorable developments were reported by just 19% of Republicans but by 73% of Democrats. Nearly all of the difference involved references to jobs and economic policies, with Republicans holding much more favorable views on jobs and policies than Democrats. The impact of these disparate views led 79% of Republicans to anticipate a continuous expansion over the next five years and 66% of Democrats to anticipate a recession.
While the partisan gap on the year-ahead outlook for the economy was slightly narrower than three months ago, it is still substantial. Economic conditions were anticipated to improve during the year ahead by 75% of Republicans but only by 16% of Democrats; this gap of 59 percentage points was slightly better than the 68 percentage points recorded three months ago.
However, there is one thing that all respondents agree on… Home Prices are a huge concern…
Simply put – it's a seller's market!! And the last time that happened, things escalated quickly (as we are now seeing in San Francisco)
