Photographer: David Paul Morris/Bloomberg

U.S. Consumer Sentiment Climbs on Upbeat Assessment of Economy

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Consumer sentiment advanced to a three-month high in April as Americans’ optimism about their current financial situation and the economy reached the strongest point since 2000, University of Michigan survey data showed Thursday.

Key Points

  • Preliminary sentiment index rose to 98 (forecast was 96.5) from 96.9 in March
  • Current conditions gauge, which measures Americans’ perceptions of their personal finances, increased to 115.2, the highest since November 2000, from 113.2 the prior month
  • Expectations measure improved in April to 86.9 from 86.5

Big Picture

Americans have kept up a solid run of optimism, supported by a labor market that’s still humming and confidence that growth-boosting policies will take shape under the Trump administration. Some 52 percent of respondents to the Michigan survey reported that their finances had recently improved, the highest share since 2000. The more favorable assessment reflected higher incomes and wealth, as well as low prices.

The report hinted that households would respond to greater optimism by making big purchases. Perceptions of favorable conditions for purchases of durable goods were cited by 82 percent of respondents, the largest share since 2005.

Nevertheless, the university’s expectations measure remains divided along party lines, as 69 percent of Republicans cited favorable news about employment and economic policies, compared with only 28 percent among Democrats.

Economist Takeaways

“Much more progress on shrinking the partisan gap is needed to bring economic expectations in line with reality,” Richard Curtin, director of the University of Michigan consumer survey, said in a statement.

The report also showed “year-ahead inflation expectations remained at 2.5 percent in March and April, and well below last year’s 2.8 percent. These lows were supported by the fewest complaints that rising prices eroded their living standards,” he said.

Other Details

  • Favorable home buying attitudes were held by 82 percent of respondents, the most since 2005 and just below the record of 84 percent in 1999
  • Consumers saw inflation rate in the next year at 2.5 percent, unchanged from the prior month
  • Inflation rate over next five to 10 years seen at 2.4 percent, also the same as in March