Consumer Sentiment Gains ‘Widespread’ on Heels of Trump Victory

Supporters of Donald Trump cheer as they watch election returns, Nov. 8, 2016, in New York. (Photo: AP/Associated Press)

The Surveys of Consumers, a closely-watched index of consumer sentiment, found “widespread” optimism in reaction to the election of Donald J. Trump. The survey conducted by the University of Michigan came in at 93.8 in November, up from the preliminary reading of 91.6 and beating the median forecast for the month.

“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,” Surveys of Consumers chief economist, Richard Curtin said. “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.”

The report touting a “boost in optimism” follows another week of trading in a bull market on Wall Street. The Dow Jones Industrial Average (INDEXDJX:.DJI) closed above 19,000 for the first time ever Tuesday as markets continue a post-election Trump rally.

“The post-election boost in optimism was widespread, with gains recorded among all income and age subgroups and across all regions of the country,” Mr. Curtain 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.”

However, consumer sentiment and trading on the heels of the election will be temporary if President-elect Trump doesn’t enact his policy proposals after being sworn in. However, the economy is clearly set to boom if he does.

“To be sure, no surge in economic expectations can long be sustained without actual improvements in economic conditions. Presidential honeymoons represent a period in which the promise of gains holds sway over actual economic conditions,” Mr. Curtain said, adding that they “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,” he concluded. “The data indicate that consumer spending will advance by 2.5% in 2017.”