The University of Michigan's consumer sentiment for the US rose to 102.4 in May 2019 from 97.2 in the previous month, easily beating market consensus of 97.5, a preliminary estimate showed. That was the highest reading since January 2004.
The consumer expectations sub-index jumped to 96.0 in May from the previous month's 87.4; and the gauge for current economic conditions edged up to 112.4 from 112.3.
Inflation expectations for the year ahead rose to 2.8 percent in May from 2.5 percent in April; and the 5-year outlook increased to 2.6 percent from 2.3 percent.
"The Index of Consumer Sentiment surged in early May to its highest level in fifteen years. All of the May gain was in the Expectations Index, which also rose to its highest level since 2004, while the Current Conditions Index was virtually unchanged and well below the cyclical peak set in March 2018. Consumers viewed prospects for the overall economy much more favorably, with the economic outlook for the near and longer term reaching their highest levels since 2004. The gains were recorded mostly before the trade negotiations with China collapsed and China responded with their own tariffs. As shown in the chart, unaided references to tariffs peaked in July 2018 at 35% and have generally declined to just 16% in early May 2019. The July peak corresponds to the initial imposition of tariffs. To be sure, negative references to tariffs rose in the past week and are likely to rise further in late May and June. Those who held negative views about the impact of tariffs on the economy and pricing had values on the Expectations Index that were 25 points lower, and expected the year-ahead inflation rate to be 0.6 percentage points higher. Even apart from the direct impact of tariffs on prices, rising tariffs could cause a more general loss of confidence which could further diminish the pace of consumer spending. At present, the data point toward moderate spending growth in the year ahead. Nonetheless, the data indicate the corrosive impact of an escalating trade war.", Surveys of Consumers chief economist, Richard Curtin, said.
5/17/2019 2:21:26 PM