According to a Bloomberg report, consumer confidence index jumped to the highest level in 15 years in December. President-elect Donald Trump took to Twitter to congratulate himself for the feat, tweeting “Thanks Donald!”. The report shows that consumer confidence surged 4 points to 113.7, a level unseen since 2001. In November, the index was only 109.4 but this month it topped all analysts’ expectations.
Analysts noted that the optimism related to stock prices jumped to a 13-year high. Americans are very confident that the economy will bounce back, incomes will rise and job prospects will multiply. The surge in optimism may have something to do with Trump repeated pledges to prevent U.S. jobs from leaving the country.
Optimism Echoes Housing Market’s Developments
Researchers also found that older consumers were the most optimistic about economic prospects. Experts, however, caution that the optimism would remain high only if GOP delivered its promises. The analysis also revealed that 21 percent of respondents are confident they’ll have more job prospects in the coming six months. In November, only 16 percent shared the enthusiasm. This month, about 21 percent of consumers believe their incomes will rise, a significant rise from 17.4 percent last month.
The New York Times commented on the revelations, underlining that the report echoes the improvements noticed in the housing market. A composite index that monitors home prices jumped 5.1 percent in 20 cities in October from a year prior.
The Times, however, found that an increase in borrowing costs may rein in the enthusiasm on the housing market. The head of the at S&P Dow Jones index committee, David Blitzer, confirmed both housing prices and the overall economy are hinting towards a rebound.
Yet mortgage interest rates spiked post-election and experts expect a continued rise despite stalling wages and incomes. Blitzer noted that home prices trends do not seem to be influenced by affordability. He explained home prices cannot outpace wages and inflation ad infinitum.
After Trump credited himself for the good news on Wednesday, the hashtag “#thanksdonald accrued nearly 100,000 tweets over just 12 hours. On Tuesday, the brash billionaire took credit for a surge of 10 percent in global economy after his election.
The world was gloomy before I won – there was no hope. Now the market is up nearly 10% and Christmas spending is over a trillion dollars!
— Donald J. Trump (@realDonaldTrump) December 26, 2016
Experts Have Mixed Views
And while some experts agree that he successfully delivered hope, other experts remain cautious. A senior researcher at Moody’s Analytics said that it is too early to tell if the figures have something to do with Trump’s win. He noted the numbers change from one month to another and a single month cannot mark a trend. Yet the economist does agree that the surge in optimism may be related to Trump’s supporters’ happiness and other people’s relief that the rollercoaster election is over.
David Wessel of The Brookings Institution, a Washington D.C-based think tank, believes GOP and their candidate should take credit for the surge. Wessel added, however, that it would be an exaggeration to say real spending and investment have backed recent consumer confidence readings. He pointed out that Trump’s move to congratulate himself for the achievement is not wise. Because if Congress fails to deliver GOP promises, people would blame Trump for it.
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