Sustaining the New American Optimism

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Sustaining the New American Optimism

Happy days are, indeed, here again! Everywhere, consumers, workers, investors, small business owners, and Fortune 500 executives have a new upbeat outlook.

Consider a snapshot from May 2018, the latest month with complete numbers.

The NFIB’s small business optimism index surged to 107.8 in May 2018 from 104.8 in April, well above the 105 consensus. That’s the highest in the 45-year history of the report! NFIB President Juanita Duggan said, “Main Street optimism is on a stratospheric trajectory thanks to recent tax cuts and regulatory changes. There were also a number of additional record readings in this report, including increases in compensation, positive earnings trends, positive sales trends, and expansion plans.” She added, “The biggest challenges faced by small business owners these days are no longer tied to government regulations, red tape, or taxes, but instead to finding qualified workers.”

The Conference Board Consumer Confidence Index in May, stood at 128.0, up from 125.6 in April. The Present Situation Index increased from 157.5 to 161.7, while t

he Expectations Index improved from 104.3 last month to 105.6. According to Lynn Franco, Director of Economic Indicators at The Conference Board, “Consumers’ assessment of current conditions increased to a 17-year high! Overall, confidence levels remain at historically strong levels and should continue to support solid consumer spending in the near-term.”

Similarly, the Bloomberg Consumer Comfort Index rose to 55.8 from 54 and the University of Michigan Consumer sentiment reading for May rolled in at 99.3 versus the 98.3 estimate.

U.S. household net worth rose at a 4.2% rate in the first quarter of 2018 to a record-high of $100.8 trillion! According to the Fed's Z.1 report, that’s up from the prior record-high of $99.7 trillion set in the fourth quarter. Asset value growth in the first quarter included a 7.2% growth rate for real estate, alongside a 2.5% growth pace for financial asset values.

Even more important. analysts expect a 9% growth rate in net worth in the second quarter! Why? Stock and home prices are expected to rise much faster than liabilities...

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