February Consumer Sentiment

Consumers seem to be feeling better lately.  The University of Michigan’s February Consumer Sentiment survey is confirming the change seen in the other monthly attitude index Atlas follows, Consumer Confidence.  The sentiment measure moved from 76.3 to 77.6.  It also resonates with a third measure of consumer attitudes that has been higher over the last six weeks, the weekly Bloomberg Consumer Comfort Index.

The Michigan survey suggests consumers are feeling marginally better about their current conditions, and their outlook is also improving.  Americans noted that they heard more about jobs than at any time since last May which may be influencing their perception about the future.  While the outlook measure improved from 66.6 to 70.2, less than a third of all households expect their finances to improve over the next twelve months.  Half of those surveyed anticipate an increase in income over the coming year.  A reading above 50 percent has only happened two times in the last 48 months.  Consumers are not anticipating significant inflation on the horizon, but half of the households still expect a decline in their inflation adjusted income.

This survey certainly has many headwinds.  The economy has not grown very quickly over the last 3.5 years since the recovery began, keeping Americans from their normally cheerful disposition.  Washington D.C. has been relatively paralyzed lately, and consumers are concerned; one in four voluntarily mentioned the beltway negatively in this survey.  Then there is the Euro-crisis making headlines again as institutions in Cypress are bailed-in and creating more uncertainty for the global banking system and economy.  The consumer has been resilient lately but one must wonder if the weight of the world is becoming too heavy for this intrepid group.  How does the weight feel on your shoulders?    (by C. Cox)