Consumer confidence edged higher in June after two months of declines, according to a new report. BEBETO MATTHEWS/AP
Consumer confidence rebounded slightly this month after suffering its first period of back-to-back declines since President Donald Trump’s victory in November’s election, according to a report published Tuesday by The Conference Board.
The group’s popular consumer confidence index ticked up 1.1 percent this month after declining during April and May. The tracker was salvaged by a considerable increase in respondents’ assessments of current economic conditions, as that subindex climbed 4 percent in June to its highest level since July 2001.
But as big-ticket financial and economic legislation like tax reform hangs in limbo on Capitol Hill – with Republicans asserting that some kind of bill will go through by the end of the year – Americans’ optimism in the future health of the economy appears to have eroded.
To that end, the future expectations component of the index dropped by 1.7 percent in June.
“Overall, consumers anticipate the economy will continue expanding in the months ahead, but they do not foresee the pace of growth accelerating,” Lynn Franco, director of economic indicators at The Conference Board, said in a statement accompanying the report.
The Trump administration has said it can rev up U.S. gross domestic product growth to at least 3 percent during the president’s tenure, though Treasury Secretary Steven Mnuchin last month suggested that target may not be reachable for “probably” another two years. And in the absence of tax reform and health care legislation – the latter of which may be voted on this week despite a handful of Republican holdouts in the Senate – analysts believe it may be difficult for Trump to hit his mark.
The Federal Open Market Committee, for example, earlier this month projected the economy would naturally hit a 2.2 percent growth rate in 2017 before dropping to a 1.9 percent annual expansion pace by 2019.
Still, optimism over the economy’s current state has been high during Trump’s early days in office. The Conference Board’s latest report indicated nearly a third of respondents – 30.8 percent – believe current business conditions are “good,” while a similar percentage – 30 percent – believe jobs are “plentiful.” Only 12.7 percent of respondents described business conditions as “bad,” while 18 percent said jobs are “hard to get.”
Meanwhile, a separate sentiment tracker published earlier this month by the University of Michigan’s Surveys of Consumers research outfit showed respondents’ assessment of current conditions declined by 1.9 percent over the month during the opening days of June. Future expectations, on the other hand, fell by a more marked 3.4 percent.
“The recent erosion of confidence was due to more negative perceptions of the proposed economic policies among Democrats and the reduced likelihood of passage of these policies among Republicans,” Richard Curtin, the chief economist for the Surveys of Consumers group, said in a statement accompanying the report.
Curtin and other analysts in recent months have regularly documented a stark contrast in economic sentiment based on party affiliation, with a separate report published earlier this month by Curtin noting an “unprecedented partisan divide in economic expectations … following President Trump’s election.”
“There is no question that the election of Trump caused Democrats to become more pessimistic and Republicans to become more optimistic about future economic conditions,” Curtin wrote. “Whereas most respondents coalesced to support the policies of [former Presidents] Reagan, Bush and Obama, no such consensus has yet emerged under Trump.”