U.S. consumer confidence is at an all-time high in 15 years. Surveys from The Conference Board show that the consumer confidence measured in Feb. of 2017 rose up to 114.8, which marks the highest it has been since Jul. of 2001. A strong labor market increases the financial security of consumers, which leads to more spending.
Since the midst of 2016, consumer confidence rose to levels that are higher than what it was before the financial crisis of 2008. This upswing has not slowed since then. Since 2010, millions of Americans have found new jobs, which made the unemployment rate drop to below five percent.
“I would say that a rising consumer confidence index predicts a rising economy. As people become more confident in future economic prosperity, they are more willing to contribute to the economy through spending and investments,” said Sophomore Economics major Kristy Niccolls. “Because we have seen the stock markets rapidly rise in the recent weeks, I would predict that the CCI will continue to rise throughout the year. However, because the CCI is primarily based on the public’s perception of the economy and not the actual numbers, this is subject to change at any time based on several factors. Due to the unpredictability of our current president, a simple thing such as a legislation issue has the opportunity to affect the CCI.”
This data is significant for the economic growth of a country that has been slowed in the United States. For 11 consecutive years, the GPD growth rate of the United States has been below three percent, which marks a record in the country’s financial history. A low growth rate results in less job growth and wage increases, which leads the consumers to spend more conservatively.
“The business confidence is increasing; there is a survey of small businesses that showed a very large increase in December that continued through January. You could suggest that there are positive consequences for the economic activity, but we will have to see if the confidence will actually sustain. So far, we haven’t seen a greater consumer confidence in spending, since the economy is still on about a 2 percent economic growth track,” said New York Federal Reserve President William Dudley in an interview with CNN.
The new optimism amongst the population raises the question of which role politics will play in this situation. President Obama was able to lead the country out of the economic crisis, reestablish consumer confidence, improve environmental protection, and create social programs like Obamacare. However, new President Donald J. Trump plans to go a different route.
“Overall, consumers expect the economy to continue expanding in the months ahead. It’s not hard to see why younger people, who are less likely to own stocks, are more likely to have voted Clinton, and are more likely to rely on Obamacare than older people, would be less confident,” said Director of Economic Indicators and Surveys at The Conference Board Lynn Franco.
Trump’s promises on tax breaks, less regulation of businesses, and the re-negotiation of trade agreements might be part of the rising confidence in the U.S. Even though these changes might have a negative impact on the environment and international relations, it could also mean more opportunity for the country when just looking at the financial growth. President Trump was at a good starting point to begin his term at since the country was in good condition, compared to President Obama’s inauguration following the beginning of the financial crisis in 2008.
In the end, only time will tell how consumers’ spending habits will shape the economy and what the current administration will do to lead the country to substantial growth and job security.