Americans’ outlook toward the economy and inflation has incrementally improved over the last 12 months.
The index for consumer sentiment, a measurement of the economy’s health based on consumer opinion regarding a household’s current financial situation, general economic outlook, and savings capability, rose 3.3% in March and 28.1% over the last year, according to the latest data from the University of Michigan.
The index saw a total change of less than three index points, rising from 76.9 to 79.4, the highest level since July 2021.
Americans’ sentiments on current economic conditions and their outlook about the future also rose during the month.
Sentiment about current economic conditions jumped from 79.4 to 82.5, a 3.9% increase from February and a 24.4% rise since March 2023. Meanwhile, the index for consumer expectation inched up from 75.2 to 77.4, marking a 2.9% increase month over month and a 30.7% rise year over year.
Overall, consumer sentiment remained flat throughout the first quarter of 2024, according to Joanne Hsu, director of the Surveys of Consumers at the University of Michigan.
“This stability reflects a perception among consumers that the economy has been holding steady in its current state,” said Hsu. “As the election season progresses and debates over economic policy become more salient for consumers, their outlook for the economy could become more volatile in the months ahead.”
Critically, she said consumers feel optimistic about recent stock market gains, confident that inflation will continue to soften, and hopeful about modest improvement to their finances.
According to the report, Americans expect inflation to climb at an annualized 2.9% rate, a slight decrease compared to the 3% rate in February. While the long-run inflation expectations fell from 2.9% to 2.8%, the short-run expectations have continued to hover within the 2.3% to 3.0% range.
“Not only did inflation expectations fall sharply, so did inflation uncertainty,” said Hsu in a statement, per Bloomberg. “As such, consumers are now broadly in agreement that inflation will continue to slow both over the short term and the long term.”
Hsu was not immediately available for comment when contacted by The Dallas Express.