After Trump tax cuts, most households give thumbs-up to US economy
Independent Women’s Forum visiting fellow Mattie Duppler and Capital Wave forecast editor Shah Gilani on whether President Trump’s tax plan will continue to help the economy grow and why the market is experiencing volatility.
A majority of U.S. households gave positive reviews of the government’s economic policies, according to the latest report on consumer sentiment.
It’s the first time that more households than not believed the government is doing a “good job” on the economy since May 2009, according to Gluskin Sheff Chief Economist and Strategist David Rosenberg. During the remainder of the Obama administration, most households said the government was doing a “poor job.”
The turnaround, noted in the University of Michigan’s consumer survey, follows the passage of a $1.5 trillion tax-cut package, which President Donald Trump signed in December. Following the 2008 financial crisis, the Federal Reserve embarked on policies to lower benchmark interest rates to virtually zero.
Economic growth and consumer sentiment offered a rosier-than-expected picture of the U.S. economy Friday.
The initial estimate for first-quarter GDP growth came in at 2.3%. That reflects a slowdown from the previous quarter, when economic expansion hit 2.9%, but economists expected even softer growth of around 2%. It was also the best GDP figure for any first quarter since 2015.
Some consumers “pumped the brakes” on spending during the January to March period, which likely kept a lid on GDP growth, according to Mike Loewengart, vice president of investment strategy at E*TRADE.
“But that could only be temporary as the effects of tax reform and a tightening labor market have the potential to add a little luster to paychecks,” he added. “We just aren’t seeing that quite yet.”
U.S. consumer sentiment also beat estimates in April, with Americans viewing their own finances more favorably. The University of Michigan survey said 25% of respondents reported a recent increase in income, up from 18% a year earlier. Consumer sentiment remained at its strongest annual average since 2000.