Written by Steven Hansen
The final University of Michigan Consumer Sentiment for February came in at 101.0 – up from the preliminary of 100.9, up from January’s 99.8 and up from December’s 99.3.
The Econoday consensus range was 100.4 to 102.0 (consensus 100.9)
Surveys of Consumers chief economist, Richard Curtin, makes the following comments:
Consumer sentiment rose to 101.0 in February, nearly matching the expansion peak of 101.4 set in March 2018. The coronavirus was mentioned by 8% of all consumers in February when describing the reasons for their economic expectations. However, on Monday and Tuesday of this week, the last days of the February survey, 20% mentioned the coronavirus due to the steep drop in equity prices as well as the CDC warnings about the potential domestic threat of the virus. While too few cases were conducted to attach any statistical significance to the findings, it is nonetheless true that the domestic spread of the virus could have a significant impact on consumer spending. Importantly, the early indications suggested only a very modest impact as the Sentiment Index among consumers who mentioned the coronavirus was still quite high (just over 90.0). If the virus spreads into U.S. communities, consumers are likely to limit their exposure to stores, theaters, restaurants, sporting events, air travel, and the like. There is likely to be some advance buying and increased online shopping, but much of the discretionary spending may not occur. To be sure, there is no reason to anticipate that consumers will engage in such extreme measures at this time. It is a fine line that needs to be drawn to encourage people to take normal steps of preventive hygiene but not to engage in panic reactions. Panic is best avoided by a strong sense of confidence in the government’s responses that aim to control the potential spread of the virus and limit any resulting damage to the economic welfare of consumers. The most effective fiscal and monetary policies include proposed reactions to the virus that are transparent, well understood, and act to maintain confidence in government economic policies close to its nearly two-decade high (see the chart).
z mich sentiment.png Source:http://www.sca.isr.umich.edu/files/featured-chart-b4862e0f.png
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