Consumer sentiment rises to 13-month high on strong jobs report and declining inflation
Alicia Wallace, CNN
Decreasing inflation and a strong labor market are helping consumers feel better about the economy this month, according to a thorough review released Friday by the University of Michigan.
The preliminary consumer sentiment index for February rose to 66.4 from 64.9 in January, the university said on Friday. This is the best value since January 2021, when the index was 67.2 points.
Economists had expected the main index to rise slightly to 65, according to the Refinitiv consensus.
The sentiment is supported by the recent decline in inflation and continued strong economic data, especially in the labor market, Joanna Hsu, the university’s director of consumer surveys, said in an interview with Bloomberg TV on Friday. In January, the US economy added 517,000 jobs and the unemployment rate fell to 3.4%, the lowest level since May 1969.
“As long as consumers still believe that their incomes will remain high, I think this will continue to boost consumer sentiment and their willingness to spend,” Xu said.
However, the uncertain economic picture leaves many consumers still worried about what’s next.
“Consumers are very prepared for the downturn, they are preparing for an increase in unemployment, and therefore they will continue to be cautious in their spending,” she noted.
The survey also showed that consumers expect inflation to remain high for the foreseeable future. Annual inflation expectations rose to 4.2% from 3.9% in January. Rising gas prices in recent weeks likely contributed to this recovery, Xu said.
Long-term inflation expectations remained stable at 2.9% for the third month in a row.
Inflation expectations are important data for the Federal Reserve. If consumers believe that prices will remain high, this could lead to higher wage requirements, which could lead businesses to raise prices.
This story is evolving and will be updated.
The-CNN-Wire
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The consumer sentiment index rose to a 13-month high on the back of a strong employment report, lowering inflation first appeared on KION546.
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