UofM Consumer Survey Returns Positive Results
The University of Michigan's Consumer Survey returned overwhelmingly positive results this morning.
The Consumer Sentiment Index came in at 94.6, a significant beat on expectations of 91.5 and a 4.3 percent increase from May. The index of consumer perceptions of current economic conditions jumped 6 percent month-over-month from 100.8 to 106.8, while the index of consumers' economic expectations rose 3.1 percent from 85 to 86.8.
The three figures each represent at least 10 percent increases year-over-year.
The report is an about-face for consumer confidence, which had been on a steady decline since January according to the University of Michigan's data.
Survey of Consumers Chief Economist Richard Curtin explained this morning's figures. "The June gain was due to the most favorable personal financial prospects since 2007, with households expecting the largest wage gains since 2008."
Additionally, he curiously pointed to the Fed's looming interest rate hike as a reason for high consumer sentiment. "The expectation of rising interest rates has caused consumers to view current rates as attractively low, but it has not yet prompted the belief that it would be better to borrow-in-advance of future increases."
Curtin said that for consumer demand to stabilize at its currently favorable levels, the Fed would have to institute a series of slow, incremental rate hikes.
According to him, this month's data is consistent with 3 percent annual growth in real personal consumption expenditure during 2015.
The market appeared to receive the U of M report as a positive sign, as S&P futures jumped to an all-day high of 2,100.15 just minutes after its release. The Nasdaq also increased to tie its high for the day at 4,474.70.
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