The Reuters/University of Michigan’s Consumer Sentiment Index increased from 72.4 in mid-May to 74.3 at the end of the month, exceeding the Bloomberg forecast of 72.5. Further, the index is up almost 5 points from the April reading.
There had been some suggestions, including myself, that Bin Laden’s death at the beginning of the month may have temporarily lifted consumer spirits. And polls following Saddam’s capture lent credibility to this line of reasoning.
But the continued rise in confidence suggests that more is at work here, and despite the headwinds facing economic activity, the mood is improving.
An easing of sky-high gasoline prices may be helping and further declines would likely aid consumer confidence and lend support to retailers.
And there’s more good news, as short-term inflation expectations eased.
“The one-year inflation expectation fell to 4.1 percent from 4.6 percent, its first decline since September 2010. The survey's five-to-10-year inflation outlook held steady at 2.9 percent,” Reuters said.
All in all, the latest data on sentiment and inflation are likely to receive a warm welcome at the Fed, which has been tasked with keeping inflation under wraps while promoting economic growth.
1 comments:
Even a small boost to the economy is a good thing - small signs lead to bigger things quite often.
Post a Comment