US consumer confidence still benefiting from election effect, Univ. Michigan says

Consumer confidence in the States continued rising in March as Republican voters continued to wax optimistic on the prospects for their incomes, job prospects and lower inflation, according to the results of the most widely-followed survey.

The University of Michigan's consumer confidence index rose from a reading of 96.3 in February to 96.9 for March, according to revised data for the month.

"Democrats expect an imminent recession, higher unemployment, lower income gains, and more rapid inflation, while Republicans anticipate a new era of robust growth in incomes, job prospects, and lower inflation. It is a rare situation that combines increasing optimism, which promotes spending, and rising uncertainty which makes consumers more cautious spenders," said Richard Curtin, the survey's chief economist.

However, the final reading for March was less than the preliminary estimate of 97.6 published roughly a fortnight earlier.

It also came in shy of economists' forecasts for a print of 98.0.

Improved appraisals of the current situation were wholly responsible for March's gains in the headline index, with the correspnding subindex advancing from 111.5 to 113.2 even as another linked to consumers' expectations was stable at 86.5.

In parallel, a gauge of consumers' expectations for prices looking one year out edged higher from 2.40% to 2.50%, while another spanning the five-year horizon increased from 2.20% to 2.40%.

Curtin also believed consumers had grown more accustomed to the new low-growth environment, influencing their survey responses.

"The high prevailing level of sentiment reflects the use of changed evaluative criteria. Like economists who have lowered growth prospects, consumers have done the same, and have thus judged lower rates of growth more favorably than they would have in an earlier era. While the partisan divide will likely recede in the months ahead, consumers' new evaluative standards will resist change."