U.S. consumer sentiment eased slightly in February from a high level as Americans' expected gains in incomes, jobs and after-tax pay mostly offset their worries about rising interest rates and stock market volatility, the University of Michigan said Friday.
The school’s monthly consumer sentiment index, which has remained at favorable levels for more than a year, is just below the October 2017 peak of 100.7, the highest level since 2004, economist Richard Curtin, director of the surveys, said.
The index was 99.7 in the February 2018 survey, up from 95.7 in January and 96.3 in February 2017. Economists surveyed by The Wall Street Journal had expected a final February reading of 99.5, down from a preliminary figure of 99.9. The related Current Conditions Index was 114.9 in February, up from 110.5 in January and 111.5 last February.
"Modest hikes in interest rates will not cause postponement of discretionary purchases as long as wages and take-home pay continue to rise," Curtin said. "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.
"Partisanship has greatly influenced perceptions of the tax cut legislation. When asked to identify recent economic changes, net positive references to the tax cuts were made by 37 percent of Republicans and by 22 percent of Independents, but among Democrats, net negative references were made by 4 percent,” Curtin said. “The partisan division is likely to last even after the cuts add to take-home pay and boost spending."