Consumer spending defied expectations according to the University of Michigan’s final December sentiment index reading which rose to 98.3, with anything above 50 considered positive. Expectations had the reading at around 97.4, with a preliminary reading coming in earlier at 97.5.
Key Takeaways
- Confidence is at an historical high thanks to a strong labor market and better take-home pay due to tax cuts. Confidence indicates that consumer spending will contribute to the Q4 GDP, which is supported by today’s strong consumer spending data.
- Expectations for the future express concerns over the trade war with China and the dip in the stock market with US stocks nearing negative activity not seen since 1931.
- While the gauge for current conditions rose to a six-month high, the expectation measure showed decline.
A measure of buying conditions for long-lasting goods hit the best level since March, while expectations regarding inflation dipped to 2.7% from November’s reading of 2.8%. Inflation over the next 5 - 10 years was predicted to be around 2.5% in this month’s survey, higher than the 2.4% reading for November.
The major decline in the stock market has been noted, but survey respondents were more concerned with income and job prospects according to the survey director. 54% of respondents said their finances had improved in the recent past.
Expert Outlook
Richard Curtin, director of the University of Michigan consumer survey, said “ While the plunge in stock prices has recently garnered the most attention in the national press, consumers have focused more on their concerns about income and job prospects.”
Market Reaction
Spot gold is trading at $1,257.62/oz and down -0.47% in the face of today’s relatively positive economic data which points to strong consumer spending and sentiment, but with a lull in core durable goods orders and with income growth below spending.
Spot gold saw a high of $1,266.29/oz and a low of $1,256.24/oz. February futures last traded at $1,263.00/oz and are down -0.39%.
Gold Price Chart
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