Consumer Sentiment Hits Decade High

The improvement is said to be due to consecutive gains in each of the past six months, with the sentiment index improving by 20% since July 2014.

The University of Michigan’s Richard Curtin said in the report:

Consumers judged prospects for the national economy as the best in a decade, with half of all consumers expecting the economic expansion will continue for another five years. The anticipated strength in the overall economy has been accompanied by more favorable income and employment expectations. While renewed strength in consumer spending will boost the pace of economic growth in 2015, most consumers are counting only on modest income gains during the years ahead. Without sufficient wage gains, consumers will be forced to demand large price discounts to complete their purchases, adding to disinflationary pressures. Overall, the more optimistic data indicate that total real personal consumption expenditures will grow at 3.3% during 2015.

The current conditions component was 109.3, and the expectations component was 91.0. Price expectations were low, at 2.5%, for one-year expectations.

Going forward, consumer spirits should be very strong, but they have yet to translate to a similar pickup in consumer spending.

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