Michigan 67.8 vs 66.7. Big jump in expectations 72.1 vs. 68.5 (as opposed to the current situation).

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Figure 1: University of Michigan Consumer Sentiment (blue), Conference Board Consumer Confidence (tan), Shapiro, Sudhof and Wilson (2020) Daily News Sentiment Index (green). all demeaned and normalized by standard deviation (for the displayed sample period).The News Index observation for August is through 8/11/2024. NBER defined peak-to-trough recession dates shaded gray. Source: U.Mich via FRED, Conference Board via Investing.com, SF Fed, NBER, and author’s calculations.

But aggregates miss out on part of the story.

Survey director Joann Hsu notes:

Overall, expectations strengthened for both personal finances and the five-year economic outlook, which reached its highest reading in four months, consistent with the fact that election developments can influence future expectations but are unlikely to alter current assessments. Survey responses generally incorporate who, at the moment, consumers expect the next president will be.

Here’s the partisan breakdown:

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Figure 2: University of Michigan Consumer Sentiment for Democrats (blue) and Republicans (red). NBER defined peak-to-trough recession dates shaded gray. Source: U.Mich and NBER.

In August, the change in sentiment is split, with Democratic and Independent respondents indicating a rising sentiment, and Republicans a declining. The increase for Democrats in August is about one standard deviation from average.

Hsu notes:

With election developments dominating headlines this month, sentiment for Democrats climbed 6% in the wake of Harris replacing Biden as the Democratic nominee for president. For Republicans, sentiment moved in the opposite direction, falling 5% this month. Sentiment of Independents, who remain in the middle, rose 3%. The survey shows that 41% of consumers believe that Harris is the better candidate for the economy, while 38% chose Trump. In comparison, between May and July, Trump had a 5 point advantage over Biden on the economy.

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