Consumers feel better about the economy, despite rising prices
“Retail gasoline prices have fallen since the peak in March, and that fact was immediately recognized by consumers,” said Richard Curtin, chief consumer survey economist at the University of Michigan.
In early April, survey participants expected gasoline prices to rise only 0.4 cents per gallon over the coming year, a welcome retreat after March’s surge of 49.6 cents.
Consumer expectations have improved, both in terms of economic prospects and personal finances, according to the survey.
“A strong labor market boosted wage expectations for consumers under 45 to 5.3% — the biggest expected gain in more than three decades, since April 1990,” Curtin said.
So, as soaring inflation and the war in Russia continue to put pressure on energy and food prices, consumers feel there is a glimpse of light at the end of the tunnel.
Even so, Thursday’s data needs to be put into perspective.
of april The confidence index remained below its January level and lower than any month in the past decade, according to Curtin. Americans may be feeling a little better about the economy, but all the worries aren’t gone.
Meanwhile, retail sales last month took a hit as Americans spent more of their family budget at the pumps.
Economists remain hopeful that March was the peak of pandemic inflation, which would mean fewer price headwinds for consumers in the months ahead. That said, geopolitical price pressures are expected to persist for months and could dictate whether and by how much inflation may fall. On top of that, interest rates on mortgages, auto loans and credit cards are rising as the Federal Reserve continues to tighten monetary policy.