U.S. consumer sentiment rose at the beginning of March, a sign that consumers may be feeling more optimistic than they did to start the year.
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The University of Michigan on Friday said its consumer sentiment index increased to 97.8 after registering 93.8 at the end of February and 91.2 in January, the lowest level since October 2016 . Economists surveyed by The Wall Street Journal had expected a 95.3 reading.
Measures of consumer sentiment dipped earlier this year as Americans grappled with the partial government shutdown, a patch of market volatility and the threat of a global economic slowdown. Those fears seem to have receded.
This month's increase was driven by particularly strong sentiment among people in the bottom two-thirds of the income distribution, said Richard Curtin, the survey's chief economist.
The survey revealed a jump of one percentage point in income expectations among this group -- coupled with the lower expected inflation in the next year they indicated -- points to consumers anticipating higher real incomes.
A measure of expected income adjusted for inflation rose in March to the highest level since March 2002, the survey said. Overall, consumers saw inflation of 2.4% during the next year, the lowest level since October 2017, it added.
"The data indicate that real consumption will grow by 2.6% in 2019," Mr. Curtin said.
Sentiment among the top third of income earners sagged to 98.5 in March from 101.7 in February, Mr. Curtin added.
"The difference that accounted for the divergence was how households evaluated their personal finances, as lower income households expressed much more positive assessments," he said.
The Michigan survey aligns with the latest reading on consumer confidence produced by the Conference Board. That measure rebounded in February following a slump in January.
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