Investing.com – U.S. consumer sentiment rose in March, according to a report published on Friday.
The preliminary publication of the data for February from the University of Michigan's Consumer Survey Center showed that consumer sentiment rose to 102.0 last month.
That was compared to February’s reading of 99.7.
Analysts had forecast a drop to 99.3.
The current conditions indicator increased to 122.8 in March, from the previous 114.9.
Economists had projected that the index would fall to 114.5.
Furthermore, consumer expectations slipped to 88.6 in March, from the prior reading of 90.0.
That missed consensus that had expected a drop to just 89.8.
Meanwhile, inflation expectations for the next 12 months rose to 2.9% from 2.7%, while the five-year gauge was unchanged at 2.5%.
Chief economist Richard Curtin noted that the reading on consumer sentiment hit its highest level since 2004 due to a new all-time record favorable assessment of current economic conditions.
“All of the gain in the Sentiment Index was among households with incomes in the bottom third (+15.7), while the economic assessments of those with incomes in the top third posted a significant monthly decline (-7.3),” Curtin said in the report.
The decline among upper income consumers was focused on the outlook for the economy and their personal finances,” this economist explained.
The report revealed that favorable mentions of the tax reform legislation were offset by unfavorable references to the tariffs on steel and aluminum-each was spontaneously cited by one-in-five consumers.
With regard to price stability, near term inflation expectations jumped to their highest level in several years, while interest rates were expected to increase by the largest proportion since 2004.
“These trends have prompted consumers to more favorably cite buying as well as borrowing in advance of those expected increases,” Curtin mentioned.
“While income gains are still anticipated, the March survey found that the size of the expected income increase returned to the lows recorded in the past year”, he added.
Curtin pointed out that, among the top-third income households, income expectations fell more and inflation expectations rose more.
“As these households account for more than half of all consumption expenditures, the data suggest that the relative lull in consumption in the first quarter may persist for another quarter,” Curtin concluded.