Consumers are employed, getting raises and spending money. Essentially, they’re the happiest they’ve been in the past 17 years – at least from a financial standpoint, according to a recent University of Michigan study. What does that mean? It means they plan to buy houses, cars, refrigerators, furniture and televisions.
According to the study, Americans are more positive about their personal financial situations than they have been since November of 2000. More than half of those surveyed indicated their finances had recently improved. They also felt their improving financial situations would lead to purchases of durable goods due to their good financial fortunes along with relatively low interest rates and low inflation. In fact, the study indicated that consumers feel more positive about the current financial environment for buying durable goods than they have since 2005.
Considering it is estimated that consumer spending makes up close to two-thirds of the U.S. Gross Domestic Product (GDP), the current level of consumer confidence bodes well for 2017, even with expected interest rate hikes by the Fed looming later in the year.
The report indicates that, while there is a split between democratic and republican survey takers in terms of their view of the future direction of the economy, both sides agree the current state of the economy is good. With pro-growth initiatives like reduced government regulation, increased spending on infrastructure initiatives, tax reform and possibly some kind of update to the nation’s healthcare system, there is potential for continued growth in the economy for the foreseeable future.
Look for trade discussions to play a significant role in the second half of 2017. If the administration is able to rework more beneficial trade agreements with some of our key trade partners like China and the European Union, even segments of the economy that have been sluggish, like agriculture, may see an uptick as we move into 2018.
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