In The News
University of Michigan Survey Shows Rising Support For and Benefits From Tax Reform
On Friday, the University of Michigan’s survey of consumers detailed the positive impact tax reform is having on consumer confidence, taxpayers, and the economy. Below are some of the highlights from the survey.
Americans see rising income, employment growth and favorable perception of tax reform as top economic news. “Consumer sentiment rose in early February to its second highest level since 2004 despite lower and much more volatile stock prices,” said Richard Curtin, chief economist for the survey. … “Stock market gyrations were dominated by rising incomes, employment growth, and by net favorable perceptions of the tax reforms,” Curtin said. “Indeed, when asked to identify any recent economic news they had heard, negative references to stock prices were spontaneously cited by just 6% of all consumers. In contrast, favorable references to government policies were cited by 35% in February, unchanged from January, and the highest level recorded in more than a half century. (Yahoo Finance, 2/16/18)
The more consumers learn about the Tax Cuts and Jobs Act, the more they like it. “When the tax cut was first passed in late December, the details were largely unknown to the average consumer, and as we’ve moved through January, the details became clearer and employers started adjusting their withholding,” Richard Curtin, director of the University of Michigan consumer survey, said on a Bloomberg conference call. “So I think it is true that this has come because more information is available to consumers about how it would affect their own situation.” (Bloomberg, 2/16/18)
The largest proportion of households in the survey reported an improved financial situation since 2000 and expected larger income gains during 2018. A gauge of consumers’ confidence in the economic outlook rebounded this month, as low unemployment and optimism about the new tax regime outweighed financial-market volatility for American households. … ”Stock market gyrations were dominated by rising incomes, employment growth, and by net favorable perceptions of the tax reforms,” said Richard Curtin, the survey’s chief economist. That meant the largest proportion of households in the survey reported an improved financial situation since 2000 and expected larger income gains during the year ahead. (The Wall Street Journal, 2/16/18)
Republican-led tax cuts are starting to make a difference. “There were big gains in both the current economic conditions and the expectations indexes. It appears that the tax cuts signed into law by President Donald Trump -- now that they are beginning to land in worker paychecks, courtesy of lower tax withholdings -- are starting to make a difference.” (MarketWatch, 2/16/18)
Hardworking Americans believe they can pursue higher paying jobs, and seek higher wages at their current jobs. In addition, “consumers now think the labor market is turned in their favor, that they can demand higher wages and they can more easily shift jobs to follow a position that would pay them more,” Curtin said. (Bloomberg, 2/16/18)