April 2, 2012 (Chris Moore)
More American households reported an improvement in their financial situation than at other anytime in the past four years according to the latest Surveys of Consumers by Thomson Reuters/University of Michigan which edged up for the seventh consecutive month.
Consumer confidence edged up in March as households had a more favorable view of income and job trends. Consumers were still cautious about rising gas prices and the prospects of inflation.
For the first time in four years, more households reported that their financial situation had improved than had declined with more families citing income gains to explain the improvement in their finances.
But despite the more positive economic prospects over the last seven months, consumers still continued to have a dismal outlook when it came to their personal finances as only one-in-four of the households said that they expected their personal finances to improve in the year ahead.
Economic expectations were held back by the fear of increased inflation and rising gas prices, particularly among the lower income households.
For the second consecutive month, a record number of the consumers who were surveyed spontaneously reported hearing about recent unemployment gains with only 19% of those expecting the jobless rate to increase in the coming year, the lowest amount to have said so in the past decade.
Two of the three indices that make up the Index of Leading Economic Indicators posted gains in March, but all three indicators were above previous year’s levels for the first time in a year.
The Consumer Sentiment Index climbed 1.2 percent to 76.2 in March, up from 75.3 in February and was up 12.9 percent from 67.5 in March of last year.
The Consumer Expectations Index fell to a level of 69.8 in March, down 0.7 percent from a level of 70.3 in February but was up 20.6 percent from a level of 57.9 in March 2011.
The Current Conditions Index increased 3.6 percent to 86.0 in March, up from 83.0 in February and was 4.2 percent higher than the reading of 82.5 in March of last year.
Richard Curtin, Surveys of Consumers chief economist said “Although consumers are not yet optimistic about future economic prospects, pessimism has recently faded at a rapid pace. Perhaps too rapidly, as expected job and income gains may be unrealistically high for the economy to meet. Typically those least affected by the downturn can create enough activity to maintain upward economic momentum. This time it will be more challenging as housing gains can be expected to remain sluggish as record numbers reported they would lose money if they sold their home to purchase another, and upper income households may hesitate in the months ahead due to uncertainties about next year’s taxes.”
Tags: Surveys of Consumers, Reuters/University of Michigan, consumers, economic slowdown, finances, recession, financial expectations