Consumer Sentiment Rose 0.6% to 96.9 in March

Ann Arbor, MI, April 3, 2017—Consumer sentiment rose to 96.9 in March, up 0.6% from February’s 96.3 rate, according to final results from the University of Michigan.

This is 6.5% over March 2016’s 91.0 rate.

“The continued strength in consumer sentiment has been due to optimistic views on three critical components: higher incomes and wealth, more favorable job prospects, and low inflation expectations,” says Richard Curtin, Survey of Consumers chief economist. “All of these factors, however, have been influenced by partisanship. Democrats expect an imminent recession, higher unemployment, lower income gains, and more rapid inflation, while Republicans anticipate a new era of robust growth in incomes, job prospects, and lower inflation. It is a rare situation that combines increasing optimism, which promotes spending, and rising uncertainty, which makes consumers more cautious spenders. The high prevailing level of sentiment reflects the use of changed evaluative criteria. Like economists who have lowered growth prospects, consumers have done the same, and have thus judged lower rates of growth more favorably than they would have in an earlier era. While the partisan divide will likely recede in the months ahead, consumers’ new evaluative standards will resist change. In an earlier era, growth of 3.0% was below average and a cause for concern, now growth above 2.5% represents an optimistic outlook. Overall, the data indicate both rising optimism as well as rising uncertainty due to the partisan divide. The data indicate that real consumer spending will advance by 2.7% in 2017, but those gains will be uneven over time and across products.”