The final reading of the University of Michigan Consumer Sentiment Index was revised up to 98.4 in March (previously 97.8). Consumers’ perceptions of current conditions were driver behind the revision and were up to 113.3 (previously 111.2) as strength in the labor market and rising incomes returned the level to pre-shutdown readings. The six-month expectations were a bit lower at 88.8 (previously 89.2) but was not a significant decrease.
Overall consumer sentiment is back on track after the partial federal government shutdown.
Inflation expectations looked quite similar for both the 1-year and 5-year measures at 2.5% for March. The alignment suggests that both in the near- and longer-terms that consumers think prices are going to increase at about the same stable pace. Fed policymakers will find this is a reasonable level that will allow them some flexibility in setting monetary policy relative to the 2% inflation objective.
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