By Xavier Fontdegloria
Consumers sentiment in the U.S. continued to rise in early April on improving economic and job situation amid progress on vaccination, support from fiscal policy and easing of virus-related restrictions.
The preliminary estimate of the index of consumer sentiment compiled by the University of Michigan came in at 86.5 in April, up from 84.9 in March. The reading misses expectations from economists polled by The Wall Street Journal, who forecast the indicator to increase to 89.0.
The rise in sentiment was driven entirely by an improvement of current economic conditions, while future economic prospects remained unchanged from March, said Richard Curtin, the survey's chief economist.
"Consumers in early April reported surging economic growth and strong job gains due to record stimulus spending, low interest rates, and the positive impact of vaccinations," he said.
April's rise made consumer sentiment reach the highest level in a year, but despite the significant gains registered during the last two months the measure has recovered only part of the lost ground and is still far from February 2020's prepandemic level of 101.0.
April preliminary report showed a sharp rise in consumers' expected inflation rate for the next year, which increased to 3.7% compared with 3.1% in March, the highest level in nearly a decade. For the next five years, Americans expect consumer prices to rise by 2.7%, down from the 2.8% registered the previous month.
Consumers' assessment of the current economic conditions increased to 97.2 in April from 93.0 in March. The index of consumer expectations--which reflects the balance of respondents anticipating improved business conditions in the next six months--was unchanged at 79.7.
The strength in current economic conditions reflects much larger than usual stimulus payments during the past year, and much larger than usual economic gains due to comparisons with last year's shutdowns, Mr. Curtin said.
"This is opposite of the usual pattern over the past 50 years, when recoveries were paced by larger and earlier gains in expectations," he said.
The survey was conducted between March 24 and April 14. The final reading for the month will be published on April 30.
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(END) Dow Jones Newswires
April 16, 2021 10:32 ET (14:32 GMT)Copyright (c) 2021 Dow Jones & Company, Inc.