US consumer sentiment hits highest level since 2004 - Uni Michigan

Consumer sentiment in the US was revised a little lower on Thursday but the reading from the University of Michigan still came in at its highest level since 2004.

The index of consumer sentiment rose to 101.4 from 99.7 in February and 96.9 in March 2017, but was below the initial estimate of 102.

The current economic conditions index printed at 121.2 in March from 114.9 the month before and 96.9 the same month a year ago.

Meanwhile, the index of consumer expectations declined to 88.8 from 90.0 in February but was above last March’s reading of 86.5.

Surveys of Consumers chief economist, Richard Curtin, said: "Consumer sentiment at month's end was marginally below the mid-month reading due to uncertainty about the impact of the proposed trade tariffs. The sentiment index, however, still reached the highest level since 2004, and the current conditions index set a new all-time peak.

"While consumers view the current level of interest rates as still relatively low, they understand that interest rate hikes are intended to dampen the future pace of economic growth. Their reaction will both emphasize borrowing-in-advance of those expected increases as well as heighten their precautionary savings motives. The trade-off between spending and saving will crucially depend on the pace of future interest rate hikes compared with the pace of income growth. It is likely that income growth will initially dominate, tilting consumers' motives more toward spending than saving. Overall, the data are consistent with a growth rate of 2.6% in consumption from mid-2018 to mid-2019."