U. S. consumers in a good mood and households not
2023.02.10 13:58
U. S. consumers in a good mood and households not
By Ray Johnson
Budrigannews.com – A survey released on Friday found that while consumer sentiment in the United States reached a 13-month high in February, households expected inflation to remain high for the foreseeable future.
The preliminary February reading of the overall index of consumer sentiment from the University of Michigan came in at 66.4, which is the highest reading since January 2022 and an increase from the previous month’s reading of 64.9. Reuters polled economists and predicted a preliminary reading of 65.0.
After falling to a low of 50.0 in June of last year, the sentiment index has increased. From 68.4 in January, the survey’s measure of current economic conditions increased to 72.6 this month. Its consumer expectations gauge dropped from 62.7 the previous month to 62.3, likely indicating that concerns about a recession are still present.
A rise in the stock market and continued strength in the labor market probably contributed to the improvement in sentiment. According to economists, it gave people hope that the economy would survive the dreaded recession and that any downturn would likely be brief and mild. The sharp declines in retail sales that occurred in November and December appeared to be a fluke, according to rising sentiment.
Christopher Rupkey, chief economist at FWDBONDS in New York, stated, “Consumers sure don’t know it if a recession is coming.” We already know that consumers purchased a lot of cars and light trucks for the first month of the year, and we anticipate that the retail sales report for the month of January will return to positive territory.”
According to an economist survey conducted by Reuters, retail sales are expected to rise 1.5% in January after falling 1.1% in December.
The one-year inflation expectations reading from the University of Michigan survey increased to 4.2% this month from 3.9% in January. For the third month in a row, its five-year inflation outlook remained unchanged at 2.9%, and it has remained within the narrow range of 2.9-3.1% for 18 of the last 19 months.
The recent rise in the cost of gasoline probably contributed to the rise in near-term inflation expectations.
The Federal Reserve of the United States was forced to adopt an aggressive monetary policy stance as a result of higher inflation. Since March, the central bank has increased its policy rate by 450 basis points, moving it from close to zero to a range of 4.50 percent-4.75 percent. In recent months, the Fed has slowed down the rate at which it raises interest rates.
According to Jeffrey Roach, chief economist at LPL Financial (NASDAQ:), “The Fed still has work to do in stifling inflation, the economy is steadily slowing, but conditions are stable enough for the economy to eke out growth this year.” in North Carolina’s Charlotte.
