US consumer sentiment
According to a report from the University of Michigan, the US consumer sentiment index improved in March 2017. It stood at 97.6 in March 2017, compared to 96.3 in February 2017.
The March reading beat the market’s expectation of 97. The data were released on March 17, 2017.
The consumer sentiment index focuses on three areas:
- What are consumers’ views of their own financial situations?
- How do consumers view the general economy over the short term?
- How do consumers view prospects for the economy over the long term?
Impact on the economy
The improvement in the US consumer sentiment index is a positive sign for the economy. The index improved in March compared to February 2017, indicating that the overall situation for consumers seems to be improving.
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 in the economy (VFINX) (VOO) (SPY) in the near future.
The improvements in this index indicate that consumers’ long-term view of the economy (IWF) (QQQ) is improving. The Federal Reserve has also started its gradual rate hike process, indicating that the economy is gaining strength. The positive consumer sentiment is also an important driver of the market’s movements. The market rally, which we’ve been seeing in the last four months, has mainly been driven by an optimistic view of the US economy.
In the next part of this series, we’ll analyze the performance of the Eurozone ZEW economic sentiment index.