Four-Month High in U.S. Consumer Sentiment to Sustain Spending

Retail Struggles While Consumers See a Rebound

A four-month high in consumer confidence indicates Americans remain optimistic about their incomes, helping to support steady growth in spending this year, University of Michigan survey data showed Friday.

Highlights of Michigan Sentiment (May, Preliminary)
  • Index rose to 97.7 (forecast was 97) from 97 in April 
  • Expectations measure rose to 88.1 in May from 87 
  • Current conditions gauge unchanged at 112.7

Key Takeaways

Americans are increasingly confident in their financial prospects, with 44 percent expecting an improved situation in the year ahead, the highest share since 2004. While the partisan divide remains wide, it’s narrowing somewhat, as 34 percent of Democrats had a favorable economic outlook for the year ahead, up from 21 percent three months ago, against 83 percent of Republicans. Recent job growth is supporting Americans’ optimism about the labor market, though consumers may need to see more significant wage gains to sustain confidence levels.

Other Details

  • Gap in expectations index between Democrats and Republicans narrowed to 55 points, as Democrats were less concerned about an immediate recession, personal financial setbacks
  • Consumers saw inflation rate in the next year at 2.6 percent, compared with 2.5 percent in the prior month
  • Inflation rate over next five to 10 years seen at 2.3 percent after 2.4 percent
  • Buying plans for durables rose to a decade peak, while vehicle buying conditions fell to a three-year low, according to the report
  • Consumers had the most favorable views on home selling in more than a decade
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