(Bloomberg) -- Consumer sentiment rose in March as Americans registered sunnier views about the state of their finances while becoming less upbeat about the long-term economic outlook, University of Michigan survey data showed Friday.
Key Points
- Final sentiment index rose to 96.9 from 96.3 in February
- Compares with 97.6 median estimate of economists; preliminary reading was also 97.6
- Current conditions gauge, which measures Americans' perceptions of their personal finances, increased to 113.2 from 111.5 the prior month; while that's the strongest since July 2005, it's below a preliminary reading of 114.5
Big Picture
Sentiment is holding close to its healthiest levels in more than a decade even as Americans, especially middle- and upper-income earners, monitor an easing in the stock-market rally that could moderate household wealth. Optimism since the November election has largely cut along party lines, with Republicans feeling much better that the new administration's policies will boost growth. At the same time, Americans of all political stripes have been buoyed by further labor-market strengthening.
Economist Takeaways
“The data indicate both rising optimism as well as rising uncertainty due to the partisan divide,” Richard Curtin, director of the University of Michigan consumer survey, said in a statement. “Optimism promotes discretionary spending, and uncertainty makes consumers more cautious spenders, which will result in uneven gains over time and across products.”
Other Details
- Gauge of expectations was unchanged from February's 86.5; preliminary reading was 86.7
- While Republicans and Democrats had similar views of current finances, nearly twice as many Republicans as Democrats expected their finances to improve
- Partisan divide was little changed between early and late March and over the past several months, Curtin said on conference call after data release
- Gauge of five-year economic outlook fell to 103, the lowest since October, from 112 in February
- Consumers saw inflation rate in the next year at 2.5 percent, compared with February's 2.7 percent
- Inflation rate over next five to 10 years seen at 2.4 percent after 2.5 percent
To contact the reporter on this story: Michelle Jamrisko in Washington at mjamrisko@bloomberg.net.
To contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Vince Golle
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