U.S. Consumer Sentiment Exceeds Forecast on View of Finances

U.S. consumer sentiment exceeded estimates in April on Americans’ increasingly favorable views of their finances, University of Michigan survey data showed Friday.


  • Sentiment index fell to 98.8 (est. 98) from 101.4 in March; preliminary reading was 97.8
  • Current conditions gauge, which measures Americans’ perceptions of their finances, dipped to 114.9 from record 121.2 in the prior month; preliminary reading was 115
  • Expectations measure eased to 88.4 from 88.8; preliminary reading was 86.8
  • Year-ahead inflation expectations dipped to 2.7 percent from 2.8 percent in prior month
  • Key Takeaways

    While the decline reflected negative sentiment about the effect of tariffs on the economy, consumers remained upbeat about their financial situation, partly a reflection of the recent tax legislation, according to the University of Michigan.

    Recent income gains were reported by 25 percent of respondents, up from 18 percent a year ago. Some 40 percent expected income gains, on par with the average over the past year.

    Even with the cooling, sentiment remains elevated by historical standards, higher than any other annual average since 2000. That, along with tax cuts that have boosted Americans’ disposable income, bodes well for a pickup in consumer spending following a 1.1 percent annualized advance in the first quarter as reported earlier Friday by the Commerce Department. According to the university, the level of sentiment is consistent with 2.7 percent real personal consumption in the coming year.

    While consumers pulled back last quarter, solid business investment, higher employee compensation and tax cuts are expected to buoy growth in the second quarter, in line with the Federal Reserve’s view that the factors holding back growth were transitory.

    A measure of inflation in the GDP report, tied to consumer spending and excluding volatile food and energy costs, advanced at a 2.5 percent annualized pace, the fastest since 2011, adding to signs that price gains are picking up. The Michigan survey showed consumers expect inflation to average 2.5 percent over the next five years.


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    Dean Popplewell

    Dean Popplewell

    Vice-President of Market Analysis at MarketPulse
    Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
    Dean Popplewell