Consumer Sentiment Beats Expectations
Consumer confidence across the United States surged in May, fueled by rising home prices and a surging stock market and slightly beating analysts' expectations.
The May report on consumer sentiment by the University of Michigan and Thomson Reuters said sentiment rose to 84.5, up 10.6 percent from April and 6.6 percent over May 2012. A consensus of experts on Briefing.com expected the reading would remain at 83.7, which was established in a preliminary report two weeks ago.
The report's consumer expectations index, which measures consumer sentiment about future spending plans, also registered a healthy increase, up 11.8 percent month to month to 75.8.
The chief economist for the survey, Richard Curtin, said the rise in consumer confidence is a payoff for the Federal Reserve's aggressive policies to keep lending rates low so businesses and homeowners could borrow money for less in order to invest.
"Consumers still expressed concerns with their financial prospects, especially about income gains over the longer term," Curtin said. "It will take actual and repeated income increases rather than simply a renewed optimistic outlook for consumers to permanently revise their income expectations upward."
He added that gains in consumer spending will encourage businesses to hire more, which will generate more tax revenue that will help bring down the federal budget deficit and delay additional tax increases.
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