The final University of Michigan Consumer Sentiment Index for April was revised up to 97.2 (previously 96.9). Current conditions were revised down to 112.3 (previously 114.2) while six month expectations improved to 87.4 (previously 85.8). Although overall sentiment has soften somewhat from the highs of 2018, consumers are generally as optimistic as they have been over the past two years or so outside of the occasional bit of volatility.
Even if consumer sentiment about current conditions — which accounts for about 40% of the index — was revised down nearly two points, the level does not suggest anything but solid confidence in the present. Labor market conditions have kept the fundamentals sound while some variation creeps in due to things like rising gasoline costs. This is the case for April.
Six month expectations — which accounts for about 60% of the index — moved higher as concerns about conditions in the medium term eased with better economic data and no sign that the taut labor market was preparing to ease up.
In spite of the increases in gasoline prices that affect consumer discretionary spending, perceptions of the inflation outlook remained low and in line with recent readings.
The 1-year inflation expectations measure was 2.5%, a tick higher than in the preliminary report (previously 2.4%) and unchanged from the prior month. The 5-year measure was 2.3%, unrevised from the preliminary reading and down from the 2.5% in the prior month.
Fed policymakers would like to see somewhat firmer inflation expectations. However, the present readings do not suggest that expectations have come unanchored, just consistently low.
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