The final University of Michigan Consumer Sentiment Index for February was revised up a scant 0.1 to 101.0 after 99.8 in January and was the highest since 101.4 in March 2018.
The proximate source of confidence is the strength in the labor market where it appears that jobs continue to be plentiful and competition for workers is leading to more competitive wage pressures. The index for current conditions was revised up to 114.8 (previously 113.8) and remained at peaks not seen in over a year.
The news about the coronavirus spread may have shaved some confidence from the outlook in February. The six-month index was revised down to 92.1 (previously 92.6) but the reading remained the highest since 93.5 in May 2019.
Soft energy prices were probably the main reason that the 1-year inflation index was revised down a tenth to 2.4% from the preliminary report in February, but is not much different than the 2.5% in January. However, expectations are still hovering just above the series low of 2.3% in December 2019. The 5-year inflation expectations reading was unrevised at 2.3% in February after 2.5% in January, and is also only narrowly above the series low of 2.2% in December 2019. Inflation expectations have not lost their anchor, but they are not for any particular upward pressure either.
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