Is Trump Good For The Economy? Consumer Confidence Hits Highest Level Since July 2001

Following a slight January decline, Americans’ confidence in the economic climate rose to a more than 15-year high, according to non-profit business research group Conference Board, which released its business confidence index Tuesday.

The index rose to 114.8 for February from 111.6 in January, nearing a longtime high of 116.3 in July 2001. The increase was in step with the stock market's rally in the wake of the election of President Donald Trump, who has both enacted and enabled a wave of deregulatory measures during his first five weeks in office. The group used a base level of 100 in 1985 for its month-to-month comparisons and has relied on a random 3,000-person sample of mailed questionnaires.

The survey responses behind those results, however, were a bit more nuanced: The portion of respondents who believed conditions for businesses to be “good” fell 0.3 points to 28.7 percent over the past month, while the portion of respondents who said conditions were “bad” also dropped, to 13.2 percent from 15.9 percent in January. A similar pattern emerged when survey participants were asked about their feelings toward the labor market, with nearly a full percentage point fewer respondents believing jobs to be “plentiful” compared to January, and just over a percentage point fewer saying jobs were “hard to get.”

The results, despite focusing solely on consumers' perspectives, somewhat contrasted with data released Tuesday from the Department of Commerce on economic growth. The American economy grew 1.9 percent in the fourth quarter of 2016, compared to 3.5 percent in the third quarter, and 1.6 percent over 2016 as a whole, compared to 2.6 percent the previous year.

The stock market, however, told a much more optimistic story, with major U.S. indexes toppling record highs. The Dow Jones Industrial Average (DJI) saw its 12th consecutive record closing Monday, while the S&P 500 (SPX) hit its highest-ever level the same afternoon.

The positive outlook among participants in the Conference Board survey somewhat reflected the towering optimism indicated by the stock market's steady rise, with marginal increases in the portion of consumers expecting more job availability and higher incomes in the future, compared to the previous month. The portion of respondents forecasting fewer job options and lower incomes both dropped by around a percentage point.