FLASH: US consumer sentiment rose by more than expected as optimism picked up for incomes and the economy, suggesting support for growth in coming months.
The University of Michigan’s (MSI) preliminary March sentiment index advanced to 97.8, the highest this year, compared with the median forecast of 95.6 in a Bloomberg survey of economists, according to a report Friday. The measure of current conditions increased while the expectations gauge rose to the highest since October. Five years ago in March 2014 under President Barack Obama, the final index was at 80.0.
- The increase in sentiment reflected a sizable jump in income expectations among middle and lower earners, while a measure of the economic outlook for the next 12 months rose to a four-year high. The report follows Labor Department figures showing average hourly earnings rose last month by the most since Y 2009.
- While below the 14-yr high reached in Y 2018, sentiment remains elevated, supported by rising wages, a stock-market rebound, lower fuel prices and the Federal Reserve’s patient approach to raising interest rates.
- At the same time, a measure of buying conditions for long- lasting goods fell to the lowest since Y 2015, suggesting consumers are reluctant to tap their rising incomes to make big purchases.
- Consumers continued to anticipate muted gains in prices. Inflation expectations for the year ahead fell to 2.4%, the lowest since Y 2017, while the rate over the next 5 to 10 years was seen at 2.5%, up from a reading last month that matched a record low. Fed officials closely monitor the inflation results in this poll.
- Households in the bottom 67% of incomes were more likely to cite net income gains, while upper-income households were more likely to report declines, according to the report.
- Optimism over the labor market increased, as the share of respondents expecting increases in the jobless rate in the year ahead fell to 21 from 31%. Respondents saw an average chance of 15.5% of losing their job in the next 5 years, the lowest reading since Y 2007.
- Interviews were conducted from 27 February to 13 March.
Have a terrific weekend…
Latest posts by Paul Ebeling (see all)
- Severe Weather to Threates 18 US States with Storms, Tornadoes - May 19, 2019
- Monaco Grand Prix, the Tops in Motorsports - May 19, 2019
- Box Office: ‘John Wick’ Takes the Weekend with $57-M Opening - May 19, 2019