A gauge of consumer sentiment improved in April, as most Americans were upbeat about current conditions, although the partisan divide about the outlook for the economy remains stark.
Consumer sentiment rose to 98 in a preliminary April reading, compared with March’s final result of 96.0, the University of Michigan said Thursday.
Economists polled by MarketWatch had expected a slight decline in sentiment to 96 in April.
!!! CLICK HERE TO READ MORE !!! #RT Univ of Michigan consumer sentiment 98.0 vs 96.5 est https://t.co/xzj9OC6ven pic.twitter.com/1CXdAeWv88
— Googliness (@gogliness) April 13, 2017
The index is very strong “but no significant further gains are likely,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
The sentiment report showed a barometer of consumers’ views on current conditions jumped to 115.2 in April from 113.2 in March. That’s the highest level since 2000. There is no partisan divide over the current-conditions index but Republicans and Democrats remain split over their expectations for the future, the report said.
The gauge of consumers’ expectations improved only slightly in April to 86.9 from 86.5 in the prior month. The gap between Republicans and Democrats remained “an astonishing 50.5 index point,” the report said.
“Much more progress on shrinking the partisan gap is needed to bring economic expectations in line with reality,” the Michigan researchers said.
Economists look for clues about consumer spending, the backbone of the economy, from sentiment readings.
The surge in consumers’ optimism since November has yet to translate into an actual pickup in consumption.
Read: U.S. consumers hold the key to restarting the reflation trade
The government will release U.S. March retail sales data on Friday. Economists are expecting a flat reading. Retail sales and consumer spending have been soft so far this year, in part because purchases of new vehicles have declined.
“It can be anticipated that optimism can commingle with uncertainty, causing uneven spending patterns across months,” Michigan researchers said.
Inflation expectations were unchanged in early April with the year-ahead gauge steady at 2.5%.