Consumer sentiment index rose to 86.5 in April from 84.9 in the prior month, according to a preliminary survey by the University of Michigan
Stimulus checks, rising coronavirus vaccinations and a rapidly growing economy lifted the spirits of Americans in early April and pushed a closely followed survey of consumer attitudes to a 13-month high. The consumer sentiment index rose to 86.5 in April from 84.9 in the prior month, according to a preliminary survey by the University of Michigan. That’s the highest level since the pandemic erupted in the U.S. in March 2020. The index had touched a 16-year high of 101 just a month earlier. The attitude of Americans about their own personal finances and the broader economy right now also climbed to a 13-month high. The so-called index of current conditions rose to 97.2 from 93 in March. By comparison, the index stood at 114.8 in February 2020. A forward-looking gauge on what consumers expect six months from now, however, showed lingering anxiety about the pandemic, including the safety of coronavirus vaccines. The index was unchanged at 79.7. What also is playing into the anxiety of Americans is higher inflation. Consumers tend to notice higher prices initially through rising gasoline prices, which have climbed sharply since the end of last year. Consumers expect the rate of inflation, now at 2.6%, to increase to as high as 3.7%. The last time they expected such a relatively high rate of inflation was a decade ago. Yet like senior Federal Reserve officials, consumers expect inflation to taper off in the longer run to a 2.7% annual rate. On the brighter side, half of all those survey expect a decline in unemployment. That’s the highest percentage ever recorded, the University of Michigan said. The U.S. is surging again as government stimulus money flows into the economy, governments relax pandemic restrictions and businesses seek to hire in anticipation of strong sales in the months ahead. The government on Thursday reported a 10% increase in U.S. retail sales in March while unemployment claims sank almost 200,000 to a new pandemic low of 576,000. The only obstacle to growth? Another spike in coronavirus cases. The number of people catching the virus is no longer declining, but it hasn’t risen very much, either. So long as the virus remains contained, the economy should keep building momentum. “Increasingly widespread rollout of vaccines is clearly having a beneficial impact on consumer sentiment and confidence,” said chief economist Joshua Shapiro of MFR Inc.