After reporting a substantial rebound in U.S. consumer sentiment in the previous month, the University of Michigan released a report on Friday showing sentiment has continued to improve in April but by much less than anticipated.
The preliminary report showed the consumer sentiment index rose to 86.5 in April after soaring to 84.9 in March. Economists had expected the index to jump to 89.6.
Despite the much smaller than expected increase, the consumer sentiment index still reached its highest level since hitting 89.1 in March of 2020.
The modest increase by the headline index reflected an improvement in assessments of current conditions, with the current economic conditions index climbing to 97.2 in April from 93.0 in March.
Meanwhile, the report showed the index of consumer expectations for April was unchanged from the previous month at 79.7.
Surveys of Consumers chief economist Richard Curtin noted recoveries in consumer sentiment are usually paced by larger and earlier gains in expectations.
“The strength in current economic conditions reflects much larger than usual stimulus payments during the past year, and much larger than usual economic gains due to comparisons with last year’s shutdowns,” Curtin said.
He added, “Other factors suppressed the pace of expected gains, including persistent concerns with vaccine safety as well as a surge in year-ahead inflation expectations to 3.7%, the highest level in nearly a decade.”
While the report showed one-year inflation expectations spiked to 3.7 percent in April from 3.1 percent in March, five-year inflation expectations edged down to 2.7 percent from 2.8 percent.
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