Consumer Confidence for the month of January was released earlier today, and after hitting the highest level in over a decade last month (August 2001), sentiment saw a slightly larger than expected pullback. While economists were forecasting the headline reading to come in at 112.8, the actual reading printed at 111.8. As shown in the chart below, though, this month’s decline barely registers relative to the move we have seen in the past few months, and sentiment remains comfortably above its historical average of 93.6 dating back to 2000.
What really stood out in this month’s report is how confidence varied by income level. As shown in the chart, for all three income levels, sentiment surged post-election. However, the only income level where sentiment hit a new high was in the middle-income level of consumers with incomes of $35K to $50K. Among many political scientists, this is the heart of President Trump’s base and consists of the “Forgotten Man” among the US population. The term “Forgotten Man” was first coined in an essay by William Graham Sumner. In a nutshell, when the rich see an injustice from which the poor are suffering, it is often the people in the middle who bare the burden of the remedying of the situation. Trump took this theme and campaigned on the idea that while traditional Republicans were the party of the rich and Democrats were increasingly focused on catering to lower income Americans, no one was fighting for the middle class. Given the results of the election, it only makes sense that confidence among this group has seen the biggest improvement since Trump. Whether their confidence continues remains to be seen, but for now, the “Forgotten Man” is still with Trump.