Written by Steven Hansen
The final University of Michigan Consumer Sentiment for February came in at 93.8 – up from the preliminary February preliminary of 91.2 – and up trom the January final of 91.2 – but significantly lower than the December final of 98.3.
The Econoday consensus range was 90.5 to 96.0 (consensus 95.5)
Surveys of Consumers chief economist, Richard Curtin, makes the following comments:
Although sentiment was still above last month’s low, the bounce-back from the end of the Federal shutdown faded in late February. While the overall level of confidence remains diminished, it is still quite positive. Nonetheless, aside from last month, it was only lower in one month since Trump’s election, but barely, at 93.4 in July 2017. Consumers continued to react to the Fed’s pause in raising interest rates, balancing the favorable impact on borrowing costs against the negative message that the economy at present could not withstand another rate hike. Long-term inflation expectations remained near the lowest level recorded in the past half century. Among households with incomes in the top third, the reduction in inflation expectations was even greater, falling to an all-time low of just 1.9%. Upper income households also anticipated a 3.0% gain in incomes, a gain well above those with incomes in the bottom two-thirds. This meant that real income expectations among upper income households rose to the highest level since the peaks recorded in the expansions in the 1980’s and 1990’s (see the chart). Note that no improvement in real income expectations was observed among households with incomes in the bottom two-thirds of the income distribution. The data indicate that personal consumption expenditures will grow by 2.6% in 2019 and the strength in consumer spending will mean that the expansion is expected to set a new record length by mid year.
z mich sentiment.png Source: http://www.sca.isr.umich.edu/files/chicsr.pdf
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