Will a Rise in US Consumer Sentiment Speed Up the Market Rally?
U.S. consumer sentiment index
According to a report from the University of Michigan, the U.S. Consumer Sentiment Index improved in April 2017. It was 98.0 in April 2017 compared to 97.6 in March 2017. The April reading beat the preliminary market expectation of 98.0. The data were released on April 13, 2017.
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The U.S. Consumer Sentiment Index focuses on three areas:
- consumers’ views of their own financial situations
- how consumers view the general economy over the short term
- how consumers view prospects for the economy over the long term
Impact on the economy
Improvement in consumer sentiment is a positive sign for the economy. The index improved in April compared to March 2017, indicating that the overall situation for consumers seems to be improving. However, in the previous part of this series, we saw that US retail sales and US inflation figures fell in March 2017, which is affecting consumer confidence.
The rise in per-capita income was a welcome sign for the US economy (SPXL) (IWM). The labor market has also shown improved figures in the past few months. Improvements in labor market conditions could speed up consumer spending (VFINX) (VOO) (SPY) in the near future. However, in March 2017, labor market performance fell. Overall falling sentiment in March also impacted the market rally that month.
In the next part of this series, we’ll see which indicators you should look at this week.