Consumer confidence rose in March as Americans were more satisfied than any time in 16 years with the current state of their finances and the economy, while remaining sharply divided along party lines about the outlook.
The University of Michigan said Friday that its preliminary index of sentiment increased to 97.6 from 96.3 in February. The median projection in a Bloomberg survey called for 97, with estimates ranging from 95 to 100. The index of current conditions jumped three points to 114.5, the highest reading since November 2000.
Households reported net gains in incomes and wealth at the strongest levels in a decade, while Republicans were “much more optimistic” than Democrats about expectations for their finances, according to the survey. Confidence is still near a 13-year high amid a stronger job market and prospects for faster growth under the new administration, but threatens to wane absent more concrete policy action.
“Consumers recognize, even Republicans recognize, that there’s lots of uncertainty about what economic policies will be passed and what the regulations will be,” Richard Curtin, director of the University of Michigan consumer survey, said on a conference call. “We have this unusual situation where we have a rise in optimism and a rise in uncertainty.”
The gauge of expectations was little changed at 86.7 from a three-month low of 86.5 in February.
Among Republicans, the expectations index was at 122.4, while it was 55.3 for Democrats, showcasing the divide in the outlook since Donald Trump’s election victory. Eighty-seven percent of Republicans expect continued gains in the economy over the next five years, compared with 22 percent of Democrats, according to the survey.
Respondents expected the inflation rate in the next year will be 2.4 percent, compared with 2.7 percent in the February survey. Over the next five to 10 years, they project a 2.2 percent rate of price growth, the lowest reading since 1980, after 2.5 percent in the prior month.