By Ed Frankl
U.S. consumer confidence rose unexpectedly to its highest level in almost three years, as consumers saw their personal finances improving as inflation cools further.
The final reading of The University of Michigan's consumer sentiment index was 79.4 in March, higher than the 76.9 in February, according to data released Thursday. The reading--the highest since July 2021--was stronger than expectations of economists polled by The Wall Street Journal, which expected it to remain at its preliminary, mid-month reading of 76.5.
"Critically, consumers exhibited confidence that inflation will continue to soften," Survey Director Joanne Hsu said.
Assessments and expectations of respondents' finances ticked up from last month, as the perceived negative effects of high prices and expenses on living standards eased, she added. A buoyant stock market also helped, albeit only for those with the largest holdings.
Although high compared with recent levels, sentiment remains essentially steady throughout the first quarter, and just shy of the midpoint between the prepandemic level of sentiment and the trough of June 2022, when it was 50.0.
"As the election season progresses and debates over economic policy become more salient for consumers, their outlook for the economy could become more volatile in the months ahead," Hsu noted.
Inflation expectations for the year ahead ticked down to 2.9% from 3.0% last month, while for the next five years, it inched lower to 2.8% from 2.9% in February, according to the data.
Write to Ed Frankl at edward.frankl@wsj.com
(END) Dow Jones Newswires
03-28-24 1039ET
