Consumer Sentiment Reaches Highest Level Since 2004
Ann Arbor, MI, March 16, 2018-Consumer sentiment rose 2.3% to 102.0, according to preliminary results from the University of Michigan.
This represents a 5.3% increase year over year.
“Consumer sentiment rose in early March to its highest level since 2004 due to a new all-time record favorable assessment of current economic conditions,” according to Survey of Consumers chief economist Richard Curtin. “All of the gain in the Sentiment Index was among households with incomes in the bottom third (+15.7), while the economic assessments of those with incomes in the top third posted a significant monthly decline (-7.3). The decline among upper income consumers was focused on the outlook for the economy and their personal finances. Consumers continued to adjust their expectations in reaction to new economic policies. In early March, favorable mentions of the tax reform legislation were offset by unfavorable references to the tariffs on steel and aluminum-each was spontaneously cited by one-in-five consumers. Importantly, near term inflation expectations jumped to their highest level in several years, and interest rates were expected to increase by the largest proportion since 2004. These trends have prompted consumers to more favorably cite buying as well as borrowing in advance of those expected increases. While income gains are still anticipated, the March survey found that the size of the expected income increase returned to the lows recorded in the past year. Among the top-third income households, income expectations fell more and inflation expectations rose more; as these households account for more than half of all consumption expenditures, the data suggest that the relative lull in consumption in the 1st quarter may persist for another quarter.”