Consumer optimism got a swift kick in the pants — in a good way — in the month of May due to hopes for trade peace between the U.S. and China, the results of a survey revealed on Tuesday. The Conference Board’s Consumer Confidence Index jumped to 98.0, which is a 12.3 point increase from April and significantly better than the Dow Jones consensus estimate of 86.0.
It’s almost as if being patient and allowing the Trump administration’s policies to kick in bears solid financial fruit. Who would’ve thought, right?
A lot of the positivity, according to board officials, is due to developments in the U.S.-China trade impasse, especially President Donald Trump pausing the most severe tariffs on the country on May 12.
“The rebound was already visible before the May 12 US-China trade deal but gained momentum afterwards,” Stephanie Guichard, the Conference Board’s senior economist for global indicators explained.
“May’s rebound followed five straight months of declines. Consumers and investors had grown sour on economic prospects amid the intensifying trade war that Trump has launched against U.S. global trading partners, with China a particular target,” CNBC reported.
However, the two sides reached a truce in early May, marking the second major walk-back of Trump’s so-called reciprocal tariffs since he levied them in his April 2 “liberation day” announcement. Other board sentiment indicators also increased.
The present situation index increased to 135.9, up 4.8 points, and the expectations index posted a major surge to 72.8, a 17.4-point gain. Investors also showed more optimism, with 44% now expecting stocks to be higher over the next 12 months, up 6.4 percentage points from April.
Views on the labor market also improved, with 19.2% of respondents expecting more jobs to be available in the next six months, compared with 13.9% in April. At the same time, 26.6% expect fewer jobs, down from 32.4%. However, the level of respondents saying jobs were “plentiful” edged higher to just 31.8%, while those saying employment was “hard to get” increased to 18.6%, up 1.1 percentage points.
Survey officials stated that the increase in positivity wasn’t relegated to one particular demographic, noting that it spread among different ages, income, and political affiliation, however, the “strongest improvements” came from Republicans.
President Trump isn’t just sitting around twiddling his thumbs, which is what Americans grew accustomed to during former President Joe Biden’s term. Granted, the reason he sat on his haunches and essentially did nothing but destroy the economy is largely due to his brain having clocked out early thanks to cognitive decline.
However, the current commander-in-chief is sharp as a tack and has an agenda he wants to see fulfilled, thus he takes action. But action doesn’t always equal immediate results. People tend to be impatient, particularly when enduring suffering. We didn’t get into this mess overnight and it’s going to take time to correct course. Hang in there.
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