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Snap AV: ‘Forgotten Man’ hasn’t moved the needle for US spending data

Summary:
A closer look at consumer data shows what Americans already kind of knew: Older, middle-class households in the heartland were the ones that got a lot more confident after President Trump’s election.For households aged 55 and older, consumer confidence climbed 25 points between October and February, according to Michelle Meyer of Bank of America Merrill Lynch. The increase for 35-55 year olds was smaller, at 9.2 points. Confidence dropped 7.8 points for Americans younger than 35.Broken down by region, it’s pretty clear that confidence rose most in areas with higher concentration of Trump-voting states:But Meyer and her team found a muddled relationship between confidence and spending by region — they said that neither job growth nor credit-card use were particularly well correlated with

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A closer look at consumer data shows what Americans already kind of knew: Older, middle-class households in the heartland were the ones that got a lot more confident after President Trump’s election.

For households aged 55 and older, consumer confidence climbed 25 points between October and February, according to Michelle Meyer of Bank of America Merrill Lynch. The increase for 35-55 year olds was smaller, at 9.2 points. Confidence dropped 7.8 points for Americans younger than 35.

Broken down by region, it’s pretty clear that confidence rose most in areas with higher concentration of Trump-voting states:

Snap AV:  ‘Forgotten Man’ hasn’t moved the needle for US spending data

But Meyer and her team found a muddled relationship between confidence and spending by region — they said that neither job growth nor credit-card use were particularly well correlated with regional changes in confidence.

For the whole country, retail & wholesale data hasn’t been much better than expected, as indicated by the green line below:

Snap AV:  ‘Forgotten Man’ hasn’t moved the needle for US spending data

That could be explained by breaking down changes in confidence by income. The jump was biggest for middle-income Americans, as demonstrated in the chart on the right above. (This makes some sense, since the middle class has lost ground in recent years. It’s difficult to make the case it’s been “forgotten,” as claimed, but it seems sensible to say that a segment of the population that’s fallen behind might be happier with a change of political party.)

The analysts continue:

Using the BLS Consumer Expenditure Survey, we find that the bulk of consumer spending – 42% as of the end of last year – is done by middle-aged households (35 – 55 years old). The youngest and oldest cohorts make up about 30% of spending each. In other words, the strong gain in sentiment among the older cohort is offset by the deterioration in sentiment among the younger generation…

The split in spending by income group is even more extreme. Nearly 40% of consumer spending is done by the highest income quintile (the top 20% of the income distribution). In contrast, the middle quintile only makes up 16% of total consumer spending.

More in the usual place.

Related links:
The “lucky 13” states and the challenges of geographically concentrated growth – Adam Carstens

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Alexandra Scaggs
Alexandra Scaggs is a markets reporter for the Wall Street Journal in New York. She writes about the U.S. stock market and investment trends. She also covers the business of markets research, writing on the calls, personalities and moves of high-profile analysts and strategists. Ms. Scaggs graduated from Washington & Lee University with a degree in business journalism.

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