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US consumer sentiment jumps to 15-year high on upbeat outlook
[WASHINGTON] US consumer sentiment jumped to the strongest level since 2004 on a surge in economic expectations following an unexpectedly strong report on first quarter growth.
The University of Michigan's preliminary sentiment index rose to 102.4 in May, topping all estimates in a Bloomberg survey of economists who had projected the gauge would hold at 97.2. All of the gain was in the expectations index, which also climbed to a 15-year high, while the gauge of current conditions ticked up,the report Friday showed.
The more upbeat sentiment comes amid first-quarter economic growth that topped expectations at 3.2 per cent and the lowest unemployment rate in 49 years. Still, a recent flare-up in trade tensions between China and the US may weigh on future readings as price pressures hit consumers and weigh on the economic outlook.
Consumers anticipate faster price gains, which may be welcomed by Federal Reserve policy makers who have been concerned that inflation is persistently below their target. Inflation expectations for the year ahead rose to 2.8 per cent, while the inflation rate seen over the next five to 10 years increased to 2.6 per cent.
A report this week showed the Bloomberg Consumer Comfort Index edged up, while the Conference Board confidence measure is forecast to ease slightly this month.
"Consumers viewed prospects for the overall economy much more favorably," Richard Curtin, director of the University of Michigan consumer survey, said in a statement. "Nonetheless,the data indicate the corrosive impact of an escalating trade war."
A measure of buying conditions for household durable goods dropped to the lowest since August. That signals some headwinds for future retail sales and potentially factory activity, both of which weakened in April.
The gauge of current personal finances improved while the index for expectations held steady.