On Feb 16, The University of Chicago said that its consumer sentiment index had increased in February to its second-highest level since 2004. The Tax Cuts and Jobs Act of 2017 and continuing resilience in the jobs market were primarily responsible for this increase. These factors helped Americans ignore recent volatility in the equity markets, which threatened to snap a long streak of gains.
Steady growth and resilience in the jobs market have been the highlights of the continuing economic expansion. The impetus generated by recent tax cuts will also help to raise the disposable income of U.S. citizens. This is why this is an excellent time to invest in consumer discretionary stocks.
Second-highest Level in 14 Years
The University of Michigan’s consumer sentiment index increased from 95.7 in January to 99.9 in February. This was the highest level recorded since 2004 and the second highest recorded since the 13-year high hit in October 2017. This reading exceeded most economists’ expectations who had estimated that the gauge would hit between 95.5 and 95.7.
The current conditions index, which is a gauge of Americans’ opinion about their finances, increased from 110.5 to 115.1. Additionally, the expectations index increased from 86.3 to 90.2. The overall number experienced a 4.4% increase from January’s figure of 95.7. Meanwhile, expectations for current year inflation levels remained unchanged at 2.7%.
Tax Cuts, Jobs Growth Boost Sentiment
The survey indicates that consumers are choosing to concentrate on encouraging economic data. This includes an increase in income levels, a booming job market and other related factors. Such a mindset was not impacted by recent stock market gyrations.
According to the survey’s chief economist Richard Curtin, only 6% of the respondents chose to recall discouraging news related to the equity markets, that too when prompted. Nearly 35% of the respondents provided positive references to government actions. This figure was in line with January’s reading, the highest level recorded in more than 50 years.
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