One of the big questions coming into 2019 was the state of the American consumer. The data shows that households have the financial wherewithal to spend more aggressively, but did they have the confidence? Even after the first quarter Gross Domestic Product (GDP) report that came in stronger than the consensus, there were some questions. I think the answer is emerging, and the consumer is fine and still spending. However, this is a smarter post-recession consumer that refuses to get over his/her skis.
The most recent Consumer Confidence report from the Conference Board showed that 60% of respondents responded positively when asked if they thought their own financial fortunes would be better in five years. That reading established a record.
The driving force behind this is the surge in wages that continued in April 2019.
The first quarter financial results from leading credit card issuers point to the fact American consumers are still using debit cards (actual money they have) instead of credit (money they don’t have). Although the gap is narrowing, the phenomenon of using debit more than credit began in the early part of the Great Recession and has continued since.
Often, economists and other observers have spotted consumer weakness. When I’ve seen the kind of discipline, it keeps households out of trouble. I think the ability to adjust before a crisis or in an overload mode is marvelous, and it should be seen as such, not some kind of red flag.
In March, retail sales soared, driven not only by Internet sales but also surprises in other categories. The April report will be very important to show consistency.
Giddy Up: Gallup Poll
According to Gallup, 56% of Americans feel their financial situation is good or excellent. Interestingly, that’s the same percentage of Americans that rate President Trump ‘positively’ on the economy. However, 57% feel their financial situation is getting better. Not unlike the data from the Conference Board, a full 69% of Americans think they will be better off in one year.
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