Photographer: Craig Warga/Bloomberg
U.S. Consumer Sentiment at Second-Highest Level Since 2004By
Consumer sentiment last month rose to the second-highest level since 2004 and plentiful job opportunities buoyed Americans’ spirits amid stock-market volatility, a University of Michigan survey showed Friday.
Highlights of Michigan Sentiment (February, final)
The advance in confidence caps a week of buoyant data, although President Donald Trump’s plan to impose tariffs on steel and aluminum imports rattled markets and poses a risk to growth. Consumers are generally optimistic after a Republican tax package ushered in about $30 billion in one-time bonuses across dozens of companies and led to higher after-tax incomes.
Such sentiment was evident in the report, which said the biggest share of households since 1998 said their finances had improved over the past year and expected continued gains in the year ahead. That should help underpin consumer spending, the biggest part of the U.S. economy.
In addition, the most consumers since 1984 said they had heard positive news about economic developments, with two-thirds citing changes in tax policies and rising employment. At the same time, opinions on the tax cuts split along partisan lines, with Republicans having a very positive impression, and Democrats on net judging the policy as unfavorable.
Meanwhile, few consumers mentioned the stock market, and those citing it as favorable were roughly on par with those who said it wasn’t.
“Consumers based their optimism on favorable assessments of jobs, wages, and higher after-tax pay,” Richard Curtin, director of the University of Michigan consumer survey, said in a statement. “Economic news heard by consumers continued to be dominated by the tax reform legislation and net job gains, which was untarnished by the consensus view that interest rates would increase and stock prices would remain volatile.”
Respondents “expect the unemployment rate to fall below 4 percent but they don’t expect income gains to accelerate or inflation to accelerate,” Curtin said on a Bloomberg conference call. “They were not concerned about the bad news of rising interest rates and they don’t think interest-rate increases will affect personal discretionary purchases this year.”
- Homeowners saying it’s a good time to sell rose to the highest level in a decade
- Consumers saw inflation rate in the next year at 2.7 percent, unchanged from readings in the prior two months
- Inflation rate over next five to 10 years seen at 2.5 percent, unchanged from January
— With assistance by Jordan Yadoo