American consumers stay strong in the face of coronavirus, election uncertainties

Laurie Garrett, an expert on pandemics and author of “Ebola: Story of an Outbreak,” spoke to CNN’s Bianca Nobilo about what she thinks is behind the spike in novel coronavirus cases in China.

America’s consumers haven’t felt this good about the economy in nearly two years despite nascent worries about the global coronavirus outbreak and this year’s presidential election.

The University of Michigan’s consumer sentiment index rose to 100.9 points in February, its highest level since March 2018.

The index is a survey-based gauge of how consumers assess the economy and their position in it. Friday’s data was the preliminary reading for the month, with the final reading due on February 28.

Consumers are the backbone of the American economy. The current tight labor market and low unemployment rate has kept money flowing and people spending.

“With stock markets close to record highs and gasoline prices falling, expectations could even rise further over the coming month or two,” said Paul Ashworth, chief US economist at Capital Economics.

Those factors seem to have outweighed worries about the global coronavirus outbreak, which has infected more than 64,000 people and killed 1,383 worldwide. Still, only 7% of those surveyed mentioned the outbreak.

While US stocks are near record highs, the closure of Chinese factories to avoid the spreading of the virus is weighing on that country’s oil demand, and pushing oil prices lower.

Global oil demand is expected to shrink in the first quarter, said the International Energy Agency Thursday, which lowered its annual demand growth forecast to its weakest pace since 2011.

Investors around the world meanwhile are grappling to assess the impact the outbreak will have on the global economy. The United States is less export-oriented than its European peers, which could shield it — and its consumers — from the fallout of a slowdown in China’s economy growth.

Consumers also shrugged off President Donald Trump’s impeachment trial, which ended in his acquittal earlier this month. The impeachment process, which began late last year, was not a major concern for consumers.

That said, politics remains a concern: potential changes to taxes and government spending in the face the the November presidential election is a risk noted by 10% of participants.

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