September 24, 2019
The Conference Board reported that consumer confidence declined 9.1 points in September to 125.1 after having decline 1.6 points in September. This series has been bouncing around between 125 and 130 since the beginning of this year. This series reached a cycle high of 137.9 in October of last year which also happened to be the highest level in the past 18 years. It remains essentially at that same very lofty level.
Lynn Franco, Director of Economic Indicators at the Conference Board said, “The escalation in trade and tariff tensions in late August appears to have rattled consumers. However, this pattern of uncertainty and volatility has persisted for much of the year and it appears confidence is plateauing. While confidence could continue hovering around current levels for months to come, at some point this continued uncertainty will begin to diminish consumers’ confidence in the expansion.”
Confidence data reported by the Conference Board are roughly matched by the University of Michigan’s series on consumer sentiment. As shown in the chart below, trends in the two series are identical but there can be month-to-month deviations. Both series remain at fairly lofty levels.
.The consumer should continue to provide support for overall GDP growth in 2019. The stock market is close to a new record high level. The economy continues to crank out 170 thousand jobs per month. Consumer debt in relation to income remains low. Interest rates are very low and the Fed could possibly lower rates further in the months ahead.
We anticipate GDP growth of 2.6% in 2019 and 2.4% in 2020 after having risen 2.5% last year.