U.S. Consumer Confidence Rises to Highest Level in Three Years
The U. of Michigan Consumer Confidence survey for February beat analysts’ expectations and rose to 77.5, the highest reading in three years. Economists forecasted the index would rise to 75.5, from 74.2 in January, according to a Bloomberg News survey. Of the 59 estimates aggregated by Bloomberg News, forecasts ranged from 74.8 to 78. Consumers’ optimistic outlook on the labor market helped belay concerns over the recent boon in food and energy costs, as sustained low interest rates have flooded the capital markets will liquidity, boosting underlying inflationary pressures. In fact, consumers canvassed for the confidence reading said that they expect the inflation rate to hover around 3.4 percent for the next 12 months, the same reading as January.
While today’s release is in line with other major trackers of consumer confidence, the U. of Michigan poll is still well below its prerecession levels. The five-year average of the gauge was 89.0, but plummeted in 2008 after oil touched $140 per barrel, and fell once again to an all-time low in November 2008 after equity markets around the globe crashed. Similarly, the current conditions gauge rose to 86.9 from 81.8 in the prior month, suggesting that consumers are becoming increasingly optimistic about their current financial situation.
Written by Christopher Vecchio, DailyFX Research.
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