Consumer sentiment improved in March as Americans felt better about the economy and the potential to earn money.
According to a report in The Wall Street Journal over the weekend citing the University of Michigan’s index of U.S. consumer sentiment, the index came in at 98.4 in March, up from 93.8 in February. It also higher than the 97.8 economists were expecting for March, reported The Wall Street Journal.
“Rising incomes were accompanied by lower expected year-ahead inflation rates, resulting in more favorable real income expectations,” said the survey’s chief economist, Richard Curtin, according to The Wall Street Journal. He told the paper that 1966 was the last time that a bigger amount of household gains were reported. What’s more, the paper reported the gain in sentiment in March was the most since October of 2017. Curtin noted in the WSJ report that the increase in consumer sentiment suggests the Federal Reserve could raise interest rates this year. “Overall, the data do not indicate an emerging recession but point toward slightly lower unit sales of vehicles and homes during the year ahead,” Curtin said in the report. With concerns of rising inflation, expectations are that the Fed could raise rates more during the year.
The pickup in consumer sentiment comes amid a sluggish start to consumer sales in the new year. Core retail sales were up in January, but December numbers were revised down. Retail sales were up 20 basis points from December but December sales were off 1.6 percent, which was worse than the 1.2 percent slide that was reported. The decline in December was the biggest one notched since September of 2009. The January numbers mean that only a bit of that drop was recovered. Digging deeper, the retail numbers, if you strip out gasoline and building materials and a number of other items, were up 1.1 percent, which again was not enough to compensate for the 2.3 percent downdraft in December.’