Consumer Sentiment rose for the second consecutive month, as consumers’ degree of optimism about the outlook for the U.S. economy improved. Nonetheless, confidence remains well below its level during the last expansion.
Gradual improvement in the jobs market and a sense that the economy will avoid a feared double-dip recession seem to be providing a boost to consumers’ moods, particularly their outlook for the future.
Improved sentiment may not translate to a big hike in consumer spending. While holiday sales have been solid, early indications are that retailers haven’t benefited from blowout consumer spending, consistent with a still cautious outlook.
Looking ahead, the tone has become more upbeat on multiple fronts for consumers. Double dip concerns are fading, service and manufacturing sectors continue to expand, and employment appears to be heading in the right direction.
From a big picture perspective, the economy is growing and jobs are being created, but at a pace that is keeping consumer enthusiasm subdued.
Even in an easy money environment, the mountain of issues that exist may prove too high to scale to return the economy to an above average growth trend. We anticipate that will be the case, and remain convinced that slow growth will remain the watchword for some time.