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US consumer sentiment rose in February to the 2nd-highest mark since Y 2004 as tax cuts and a strong job market helped Americans shrug off stock-market volatility, a University of Michigan survey showed Friday.
|Highlights of Michigan Sentiment (February, Preliminary)|
The Trump Effect continues
The rise in sentiment, which surpassed the forecasts of all analysts surveyed by Bloomberg, comes as Americans’ paychecks are getting bigger due to the implementation of tax cuts under legislation signed by President Donald Trump in December.
The increase is also consistent with data on solid hiring and rising wages released by the Labor Department earlier this month.
Fully 35% of respondents gave favorable references to government policies, matching January as the highest level in more than a half century, according to the report.
Most of the positive news involved changes to tax policies and employment gains, while just 6% cited negative references to stock prices.
Inflation expectations were unchanged, even after the wage figures sent US Treasury yields spiking and brought on the 1st stock market correction in 2 years.
Consumers are not expecting a sudden surge in inflation, and the fewest consumers in decades cited rising prices as a cause of declining living standards, the report said.
At the same time, rising borrowing costs may limit sentiment in coming months, with the 30-year fixed mortgage rate rising this week to the highest marks since Y 2014. The report said higher interest rates in the year ahead were expected by the biggest share of consumers since Y 2005.
“More consumers reported that they had recently heard news about economic developments in early February than at any other time since 1983,” the director of the University of Michigan consumer survey, said in a statement. “The stock market was rarely mentioned, and remarkably, it was more likely to be mentioned as a favorable development” because it was already rebounding and was up on an annual basis.
Volume: Trade on the NYSE came in at: 846-M/shares exchanged.
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Have a terrific President’s Day weekend.