Consumers are still riding high.
The University of Michigan’s report on consumer sentiment for February came in higher than expected, at 99.7 compared with the consensus forecast of economists of 99.3. That was slightly lower than the preliminary, mid-month reading for February of 99.9.
The February reading is the second highest since 2004, the survey’s chief economist Richard Curtin said.
“Consumer’s based their optimism on favorable assessments of jobs, wages, and higher after-tax pay,” Curtin said.
The portion of households saying that their finances had improved since a year ago and anticipating continued gains in the year ahead was the highest since 1998, according to Curtin.
Partisanship and anti-Trump sentiment may be holding back consumer spending, with a far higher number of Republicans than Democrats telling pollsters they think tax cuts will improve their household finances.
“Personal tax cuts are crucial to spur additional spending, but unlike prior cuts that had an immediate positive impact, this tax cut has not generated universal support across partisan lines,” Cutin said.
Recent stock market volatility has not done much to discourage consumers, who are more focused on improved labor market conditions and tax reform, Curtin reports. Consumer expectations for wage gains remain muted and expectations for inflation were unchanged.