The Reuters/University of Michigan consumer sentiment index offers one of the earliest reads on the month in progress and today's data, like the weekly jobless claims data, point to ongoing acceleration for the economy. The index is up a solid 1.4 points at mid-month to a preliminary 77.8 vs April's 76.4. Today's reading edges out February last year for the best reading so far of the recovery. Twice before, early 2010 and early last year, the index tested the 75 area and each time the index quickly fizzled.
And there may be trouble ahead for the third time given a decline in the expectations component, which is now off recovery highs with a six tenth dip to 71.7. Optimism over the future is limited, a factor that limits consumer spending. The good news in the report is a rise in the assessment of current conditions, up a very strong 4.4 points to a recovery best 87.3. This is the reading that points to strength for May's economic data.
With gas prices coming down inflation expectations remain stable, at 3.1 percent for one-year expectations, down one tenth from April, and at 3.0 percent for 5-year expectations which is up one tenth. The Dow is moving higher in early reaction to this report which, again, offers an indication of ongoing economic strength.
Market Consensus before announcement
The Reuters/University of Michigan's consumer sentiment index rose slightly to 76.4 in April. The recovery peak for this index, hit early last year, is just a little higher than the current level. The index also hit a similar peak in early 2010.