Research >> Economics
University of Michigan Consumer Confidence remained unchanged
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Confidence has remained largely unchanged during the past three months at much improved levels compared with a year ago. The halt in improvement has been due to the widespread recognition among consumers that job and income prospects will remain grim throughout the year ahead. Although the survey revealed no significant additional declines in income or job prospects, these critical expectations remained at the same record low levels recorded throughout the past year. Few consumers anticipated any significant declines in the jobless rate anytime soon. More importantly, the majority expected recurrent economic weaknesses over the next several years. Buying plans are more dependent than ever on the availability of discounts. For a large range of household durables—appliances, furniture, home electronics and the like—discounts have moderately improved buying plans, but for vehicles, smaller and less frequent discounts have dimmed consumers’ purchase plans.
Grim Outlook for Personal Finances
When asked about their financial prospects for the year ahead, just 25% of all consumers expected their finances to improve, barely above the 22% recorded one year ago. Sixty percent of all consumers expected no income gains during the year ahead in February, which was the least favorable income expectations ever recorded in the history of the surveys. Even low inflation has not eased the expected burden as just one-in-ten households anticipated any gains in their inflation-adjusted incomes in the year ahead. The absence of any improvement in their financial prospects has prompted just 14% of all consumers to express confidence in the economic policies of the Obama administration in February, down from a peak of 30% in May 2009, and barely above the all-time low of 4% recorded in the closing months of the Bush administration.
The Sentiment Index posted a small loss amounting to –1.1% from last month but was 31% above last February’s reading. While the initial gain from the cyclical low was rapid, the improvement came to a halt in the past few months. Slower economic growth is anticipated in the first half of 2010, and consumers expect no improvement in job and income conditions.
Posted: February 26, 2010 Friday 10:00 AM