Michigan Consumer Sentiment: April Preliminary Inches Up
The University of Michigan Preliminary Consumer Sentiment for April came in at 98.0, up from the March Final reading of 96.9. Investing.com had forecast 96.5.
Surveys of Consumers chief economist, Richard Curtin, makes the following comments:
Consumer sentiment inched upward in early April mainly due to more favorable views of current economic conditions. The Current Economic Conditions Index rose to its highest level since 2000 and nearly reached its all-time peak of 121.1 set in 1999. The Expectations Index improved only slightly, remaining largely unchanged at favorable levels for the past three months. While partisanship had no impact on the Current Conditions Index (Democrats and Republicans differed by just 0.4 points), the data suggest the beginning of a convergence on the Expectations Index, with the figure for Democrats rising 7% and falling for Republicans by 7%, although the gap still remained an astonishing 50.5 Index points. Much more progress on shrinking the partisan gap is needed to bring economic expectations in line with reality. A slow pace of convergence will make it more difficult to disentangle political fervor from what appears to be a growing sense among consumers that the economy will experience fundamental changes in the years ahead. It can be anticipated that optimism will commingle with uncertainty, causing uneven spending patterns across months. Moreover, differential price trends for assets, products, and imports will cause uneven trends in incomes, wealth, and spending across products as well as economic subgroups. [More...]
See the chart below for a long-term perspective on this widely watched indicator. Recessions and real GDP are included to help us evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy.
To put today's report into the larger historical context since its beginning in 1978, consumer sentiment is 14.5 percent above the average reading (arithmetic mean) and 15.9 percent above the geometric mean. The current index level is at the 88th percentile of the 472 monthly data points in this series.
The Michigan average since its inception is 85.6. During non-recessionary years the average is 87.7. The average during the five recessions is 69.3. So the latest sentiment number puts us 28.7 points above the average recession mindset and 10.3 points below the non-recession average.