U.S. consumers feel better about the economy than they have in six months, according to the latest data released by the University of Michigan.
“The gains were mainly due to a more optimistic outlook for the national economy,” Richard Curtin, a University of Michigan economist who oversees the survey, said in a prepared statement. “While consumers have anticipated gains in the national economy ever since the April shutdown, the September survey recorded a significant increase in the proportion that expected a re-establishment of good times financially in the overall economy.”
Members of upper-income households are feeling better about the direction of the economy than members of lower-income households, Curtin said. “Indeed, the data indicate that lower-income households face continued income and job losses compared with the modest gains expected by upper-income households.”
Curtin said the gap between the economic sentiments of wealthier and less wealthy families is likely to widen if Congress and President Donald Trump fail to agree on a new stimulus package to replace the measure that expired July 31.
While the economy is improving, two variables could significantly affect its short-term performance, Curtin said. They are “when and how the election is decided, and delays in obtaining a vaccine and its widespread availability.”
“Although the survey was completed before the presidential debate, it is likely that the chaotic debate has already added to these uncertainties,” he added.
The most recent University of Michigan sentiment survey included questions about potential national economic policy changes in the coming years. “In response, nearly half of all consumers (47 percent) thought higher taxes on the wealthy would have a favorable impact on economic growth prospects, and nearly half (48 percent) thought a universal basic income would have a negative impact on the economy,” Curtin said.
Another likely wildcard that will bear on economic performance is whether consumers will spend more money if they make or are given more. But the need for greater savings is well-established. A survey conducted by PYMNTS in the early days of the pandemic found that six in 10 U.S. consumers reported living paycheck to paycheck. Almost half also reported having less than $2,500 in savings.
