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March 29, 2018 3:00 PM, EDT

Consumer Sentiment Surges to Highest Since 2004

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Consumer sentiment in March reached the highest level since 2004 as a solid labor market and growth expectations offset concerns about tariffs and stock-market volatility, a University of Michigan survey showed March 29.

Highlights of Michigan Sentiment for March

• Sentiment index rose to 101.4 (estimated 102) from 99.7 in Feb.; preliminary March reading was 102.

• Current conditions gauge, which measures Americans’ perceptions of their finances, advanced to a record 121.2 (preliminary 122.8), from 114.9 in February.

• Expectations measure decreased to 88.8 (preliminary 88.6), from 90 in February.

Key Takeaways

The advance in confidence underscores buoyant consumer sentiment following tax cuts and one-time bonuses that boosted many Americans’ take-home pay.

RELATED: Consumer spending gain lags behind income for second month

Separate data released Thursday showed signs of surprisingly robust momentum in the economy, with jobless claims falling to the lowest level since 1973, personal income growing 0.4%, and spending expanding 0.2%.

The data all underpin strength of consumer spending, the biggest part of the U.S. economy.

But there were some cooler signals in the Michigan report, as year-ahead inflation expectations rose. Also, the level of consumers citing concerns about trade and government policies slightly exceeded those who saw benefits from recent tax policies.

Official’s Views

“Consumers remain confident in their future job and income prospects,” Richard Curtin, director of the University of Michigan consumer survey, said in a statement. “This newfound confidence is anchored more in stability of these economic prospects rather than the size of the expected gains.”

“Consumers are starting to see that we’re in the late stages of an expansion and times remain good, but people expect slower economic growth in the year ahead,” Curtin said on a conference call. “I’m not saying that they see a recession ahead, but they see the Fed repeating their actions this year and over the next two years and that the economy is going to slow.”

Other Details

• Consumers saw inflation rate in the next year at 2.8% after 2.7% the prior month.

• Inflation rate over next five to 10 years seen at 2.5% for third straight month.

• 57% of households reported recent financial progress, matching the 1998 all-time high.

• For durable goods, 21% said they favored buying in advance of expected price hikes, the highest level since 1990.

With assistance by Jordan Yadoo, and Alister Bull