The preliminary University of Michigan Consumer Sentiment Index for March fell to 62.0 (consensus 63.4) from 63.4 in the preliminary reading. It was the first decline in sentiment in four months and down from 67.0 in the final reading for February which was a thirteen-month high. In the same period a year ago, the index stood at 59.4. Of note the failure of Silicon Valley Bank and Signature Bank had a limited impact on sentiment. Consumer confidence was already beaten down by growing concerns about a potential recession. On a positive note, year-ahead inflation expectations receded to 3.6% from 4.1% in February.
US consumer sentiment and inflation expectations data from the University of Michigan
- The final University of Michigan Consumer Sentiment Index for March fell to 62.0 (consensus 63.4) from 63.4 in the preliminary reading and 67.0 in the final reading for February. In the same period a year ago, the index stood at 59.4.
- The Current Economic Conditions Index fell to 66.3 from 66.4 in the preliminary reading. The final February reading was 70.7.
- The Expectations Index fell to 59.2 from 61.5 in the preliminary reading. The final February reading was 64.7.
- Year-ahead inflation expectations decreased to 3.6% from 3.8% in the preliminary reading. The final February reading was 4.1%.
- The five-year ahead inflation expectations ticked up to 2.9% from 2.8% in the preliminary reading. The final February reading was 2.9%.
The headline was lower than expectations, but the market is likely going to react to the inflation expectations numbers. The fall will offer comfort to the Fed as it looks to combat rising prices. That emphasizes the credibility of the Fed (along with falling gas prices) and gives them some breathing room.
Home prices and real estate stability are massive factors for the American consumer. The report reflects some of the improved reports we have seen in new and pending home sales, mortgage applications. The accompanying chart shows we are near 40-year lows for sentiment to buy a house. Improved in affordability would help an improvement here.
About University of Michigan Consumer Sentiment Index
The University of Michigan Consumer Sentiment Index is a widely followed indicator of consumer confidence in the US economy. It is based on a survey of 500 households and measures their attitudes and expectations about the economy, personal finances, and buying conditions. The Index is released on the 10th of each month and provides insight into consumer spending, which is a significant component of the US economy.
A high reading of the Consumer Sentiment Index suggests that consumers are optimistic about the economy and their personal financial situation, and are more likely to spend money. Conversely, a low reading of the Index indicates that consumers are pessimistic and may be less likely to spend.
Overall, the University of Michigan Consumer Sentiment Index provides valuable insight into consumer behavior and sentiment, and is closely watched by economists, investors, and policymakers as an indicator of the health of the economy.
Source: University of Michigan
From The TradersCommunity News Desk