The Thomson Reuters/ University of Michigan's preliminary reading on the overall index of consumer sentiment rose to 76.3 from 73.8 in January. The barometer of current economic conditions rose to 88 from 85, while the gauge of consumer expectations rose to 68.7 from 66.6. Households with incomes below $75000 were among the most optimistic. There were different views about this data. Overall, they think the reading was a nice surprise. Given the increase in gas prices and payroll taxes, the increase in consumer confidence and expectation reflects the fact that consumers were getting over their smaller paychecks and housing prices and the stock market have been recovering. However, Cary Leahey, senior advisor of Decision Economics, New York, commented that families' perceptions of current condition were not really problem. The real problem was expectations remained low at 68.7, 10 points below the recent highs in October, 2012. Households were obviously concerned about the impact of the upcoming budget cuts and the recent increases in
tax rates (the termination of the 2 percent payroll tax
credit in December). To me, the small increase reading, even though it looks optimistic, didn't confirm anything yet. To be more certain, the economy needs to observe the change in the reading for a little bit more.
Source: http://news.yahoo.com/instant-view-consumer-sentiment-improves-february-150501716--business.html
1 comment:
Even though the increase is small, I think it's still a positive sign because with increase in gas prices, we would expect confidence to drop, but it didn't. I do agree that we have to observe the change in the readings a little longer to get a clearer sign. By the end of the year, I expect confidence to increase by a larger amount as I believe that the economy will recover at a faster pace this year.
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