Consumer sentiment in the November 2019 survey was nearly identical to the average level recorded since the start of 2017 (96.8 versus 97), according to the University of Michigan Surveys of Consumers.
In 30 of the past 35 months, the Sentiment Index was 95 or higher, a level of optimism second only to when the index was above 100 for 34 out of 36 months from January 1998 to December 2000.
Although impeachment proceedings occurred in both time periods, in the earlier period it did not cause an overall loss in confidence, said U-M economist Richard Curtin, director of the surveys. While impeachment has not recently influenced economic confidence, it could in the months ahead, he said.
The major difference between the two impeachment eras is that the current situation is accompanied by much sharper partisan divisions, he said. These divisions have so far kept the Sentiment Index unchanged at quite favorable levels, showing only small monthly variations. Overall, the data indicate that consumer spending will grow by 2.5% in 2020.
“At no other time in the past half century have the divisions in economic expectations been as wide among consumers as well as between consumers and business firms,” Curtin said. “While the partisan divisions among consumers are wide, consumer spending will continue to offset the weaknesses in business investment spending to maintain the expansion, although at a slower pace of growth.
“There are significant risks associated with tariffs, impeachment, the election, global growth and geopolitical events. It has been differences in how these risks have been assessed that underlie the partisan differences among consumers and the gap in optimism between the business and consumer sectors.”