In the US, consumer sentiment reaches a 13-month high.
In February, the US consumer confidence index as a whole increased to a 13-month high, according to a recent study, hitting a preliminary score of 66.4. This represents an improvement above the reading of 64.9 from the previous month and also the highest result since January 2022.
Economic Conditions Are Currently Improving
The poll also showed that the indicator of current economic circumstances increased this month, rising to a value of 72.6 from 68.4 in January. However, the indicator of consumer expectations fell slightly, from 62.7 last month to 62.3 this month, probably as a result of persistent worries about a recession
Consumer sentiment is boosted by a stock market rally and a strong labor market.
The recent stock market surge and the ongoing strength of the labor market are thought to be the main factors for the improvement in consumer mood. The likelihood that the economy won’t experience a severe recession and that any downturn would probably be brief and moderate has increased among experts.
January Retail Sales Are Anticipated to Increase
According to a Reuters survey of experts, data will likely show that retail sales increased 1.5% in January after falling 1.1% in December. This is good news for the economy and indicates that despite concerns about a possible recession, consumers are confident.
Rising Expectations for Inflation
A rise in short-term inflation predictions was also observed in the University of Michigan poll, with the one-year inflation estimate jumping to 4.2% this month from 3.9% in January. But for the third month running, the five-year inflation projection stayed constant at 2.9%. Expectations of inflation have increased, most likely as a result of the recent increase in gas prices.
Aggressive Monetary Policy is Adopted by the Federal Reserve
The Federal Reserve has changed its monetary policy to be more aggressive as a result of the rise in inflation. Since last March, the Federal Reserve has raised its policy rate by 450 basis points, moving it from near zero to a range of 4.50%–4.75%. Despite the economy’s slowing down, Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina, believes that this year’s growth would be supported by solid economic circumstances.