Consumer sentiment soared in the beginning of June, moving to the highest level since March.
The University of Michigan said Friday that its index of consumer sentiment hit 99.3 in the preliminary June reading, a full point higher than the 98.3 expected by economists. Last month the index hit 98.
Consumers had more favorable views of their current financial situation and of current buying conditions for household durables, that bodes well for the economy and sales.
According to University of Michigan’s consumer survey economist Richard Curtin, “greater certainty about future income and job prospects have become the main drivers of more favorable purchase plans.”
There was reason for caution in the report, however. The Expectations Index, which measures consumer views of what’s to come rather than current conditions, declined to its lowest level since the start of the year due to less favorable prospects for the overall economy. That could be an indication that consumers expect much of the gains from economic improvement have already been achieved.
Still, improved current conditions should sustain spending until inflation fears rise.
“Only when inflation and interest rates are expected to persistently exceed income and job prospects will consumers begin to curtail their discretionary spending,” Curtin said.