After reporting a pullback in U.S. consumer sentiment in the previous month, the University of Michigan released a report on Friday showing that sentiment has rebounded by more than expected in March.
The preliminary report showed that the consumer sentiment index rose to 97.6 in March after dropping to 96.3 in February. Economists had expected the index to rise to 97.0.
Despite the bigger than expected rebound, the consumer sentiment remains below the thirteen-year high of 98.5 set in January.
"The overall level of consumer sentiment remained quite favorable in early March due to renewed strength in current economic conditions as well as the extraordinary influence of partisanship on economic prospects," said Richard Curtin, the survey's chief economist.
The University of Michigan said the current economic conditions index climbed to 114.5 in March from 111.5 in February, reaching its highest level since 2000.
The index of consumer expectations showed a more modest increase, inching up to 86.7 in March from 86.5 in the previous month.
Curtin noted that political partisanship has substantially impacted expectations, with Republicans far more optimistic about the economic outlook than Democrats.
"Overall, the sentiment data has been characterized by rising optimism as well as by rising uncertainty due to the partisan divide," Curtin said.
"Optimism promotes discretionary spending, and uncertainty makes consumers more cautious spenders," he added. "This combination will result in uneven spending gains over time and across products."
On the inflation front, one-year inflation expectations fell to 2.4 percent in March from 2.7 percent in February, while five-year inflation expectations dropped to 2.2 percent from 2.5 percent.
by RTT Staff Writer
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