Consumer sentiment in the US rose incrementally in March as consumers exhibited confidence that inflation will continue to soften, according to the final results from the University of Michigan Surveys of Consumers released today.
The index of consumer sentiment rose to a reading of 79.4 in March from 76.9 in February, well within the margin of error and stable since January. It is the highest since July 2021 and topped consensus estimates of 76.5 in a Reuters poll of economists, Reuters reported.
“Overall, sentiment is essentially unchanged throughout the first quarter of 2024, remaining just shy of the midpoint between the pre-pandemic level of sentiment and the historic trough from June 2022,” Surveys of Consumers Director Joanne Hsu said in a press release. “This stability reflects a perception among consumers that the economy has been holding steady in its current state. As the election season progresses and debates over economic policy become more salient for consumers, their outlook for the economy could become more volatile in the months ahead.”
Hsu noted assessments and expectations of personal finances also improved modestly from last month, as the perceived negative effects of high prices and expenses on living standards eased.
Meanwhile, year-ahead inflation edged down in March to 2.9% from 3.0% in February. For the third straight month, short-run inflation expectations fell within the 2.3% to 3.0% range seen in 2018 and 2019. In addition, long-run inflation expectations also inched down from 2.9% to 2.8% and remain modestly elevated relative to the 2.2% to 2.6% range seen in the two years before the pandemic.