Consumer confidence in the U.S. climbed to an almost one-year high in May as Americans grew the most upbeat about incomes after inflation than at any time in a decade, the University of Michigan’s report showed on Friday.
University of Michigan’s preliminary May index rose to 95.8, the highest since June, from 89 in April; median projection in a Bloomberg survey of economists called for 89.5 Current conditions index, which takes stock of Americans’ view of their personal finances, rose to 108.6 from 106.7 Measure of expectations six months from now climbed to 87.5 from 77.6 Consumers expect year-ahead inflation rate of 2.5 percent, after 2.8 percent in April survey Inflation over next five to 10 years at 2.6 percent rate after 2.5 percent
The broad-based advance in expectations, bolstered by optimism about projected real income gains, is an encouraging sign that consumers are looking past the first-quarter slowdown and may boost spending spending, which is the biggest part of the economy. That will help usher a strong rebound this quarter and ease concerns among economists that household consumption wasn’t robust enough to make up for more modest gains elsewhere in the economy.
“The broad-based nature of the rebound in confidence underscores a renewed sense of optimism among U.S. households, and it could augur well for consumer spending going forward,” Millan Mulraine, deputy head of U.S. research and strategy at TD Securities (USA) LLC in New York, said in a research note. “Consumers discounted the first quarter GDP report as a misleading indicator, instead, they have based their expectations more on their own direct experiences,” Richard Curtin, director of the University of Michigan consumer survey, said in a statement.
“The early May data are a welcome sign of an impending shift toward spending and away from savings.” This is “a very strong report, and consistent with our view that both consumption and GDP growth will rebound strongly in Q2,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a note after the report.
Measure of the outlook over the next few years jumped by the most since 2006 Views on inflation-adjusted income gains strongest in a decade Broad-based advance in expectations was led by lower-income and younger households Highest share of households since 2000 said their earnings had recently grown Anticipated gain in home values during year ahead was highest since records began in 2007
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