(Bloomberg) -- U.S. consumer sentiment exceeded analyst estimates in January as the outlook for jobs and household income improved, University of Michigan survey data showed Friday.
Highlights of Michigan Sentiment (January, final) |
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Key Takeaways
The main index remains above-average historically, and other measures of confidence are near the highest in more than a decade. Elevated stock prices, along with steady gains in jobs and wages, are likely to support consumer confidence going forward. Consumers put the probability of stock increases during 2018 at 67 percent, the highest on record dating back to 2002.
A report earlier Friday showed nonfarm payrolls rose 200,000 in January, exceeding analyst estimates as wages increased at the fastest annual pace since the end of the recession.
At the same time, growing interest rates could limit sentiment, with the 30-year fixed mortgage rate rising this week to the highest level in 10 months. Conditions for buying homes fell to the lowest level in seven years, according to the report, and the environment for buying vehicles and household durables dipped slightly but remained favorable.
Official's Views
“The motivating force behind purchase decisions has shifted from discounts on price and interest rates to increased confidence in future job security and growth in wages as well as financial assets,” Richard Curtin, director of the University of Michigan consumer survey, said in a statement.
“As consumers learn about how much they will benefit from this tax cut, they will start spending more,” he said on an conference call after publishing the report. The tax reform “will preserve sentiment at its high levels now. So we're more likely not to see a decline over the year ahead than to see declines.”
Other Details
- Inflation rate over next five to 10 years seen at 2.5 percent after 2.4 percent in December
- 22 percent of consumers spontaneously mentioned that tax reforms would have a positive impact, compared with 6 percent who cited a negative impact
- Consumers' assessment of their financial situation was unchanged at the best levels since 2000
To contact the reporter on this story: Shelly Hagan in Washington at shagan9@bloomberg.net.
To contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Randall Woods
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