US consumers are becoming more confident by the day, apparently, even as it will likely be quite a while before the pandemic completely fades from the memories of those lucky enough to have survived it.
University of Michigan sentiment hit the highest in a year in the final print for March. 84.9 on the headline gauge represented an uptick from the initial 83 reading, and a sizable advance from February’s 76.8.
Unsurprisingly, free money and a scientific solution to a biological problem helped explain relative consumer optimism. “Consumer sentiment continued to rise in late March, reaching its highest level in a year due to the third disbursement of relief checks and better than anticipated vaccination progress,” the survey’s chief economist, Richard Curtin, said.
While consumers are more optimistic, they’re also restless. A third suggested cabin fever is getting annoying, to speak colloquially. “As prospects for obtaining vaccination have grown, so too has people’s impatience with isolation,” Curtin remarked.
A majority have heard about economic gains and an improving labor market. “The data clearly point toward robust increases in consumer spending,” the survey said.
March marked the first time during the pandemic era that consumers expect “good rather than bad times in the national economy during the year ahead.” The breakdown on that was 49% versus 41%. If you’re wondering what impact stimulus and the February jobs report may have had on those expectations, note that the comparable split in February was 36% (good) versus 53% (bad).
The figure (below) comes with the usual caveat — namely, it’s apples to oranges, and thus represents a “chart crime.” However, people like it. So I use it.
As far as inflation expectations, the expected change in median prices during the next year dropped to 3.1% compared to 3.3% last month, while the longer-term outlook ticked higher to 2.8% from 2.7%.
I’ll leave you with an amusing anecdote which, I assume, reflects expected policy changes in Washington:
Notably, among households with incomes in the top third, just 32% expected improved finances and 16% expected worsening finances, this was the worst overall reading since June 2014; the low came despite one-in-five reporting wealth gains, mainly rising stock and home values.