US May consumer sentiment rise

May 30, 2016

The United States May consumer sentiment rose, although lower than expected on prospects of an economic rebound as cheap gasoline, low interest rates and recovery in stocks raise hopes in the minds of the US consumers.

Consumer sentiment rose to 94.7 in May, up 5.7 points from 89 in April, data released by the University of Michigan showed on Friday. However, an economists’ survey predicted the data point to hit 95 this month.

"We expect that better readings on sentiment and a healthy rebound in April consumption growth will solidify expectations for a bounce-back in Q2 real GDP growth," Barclays said in a research report.

Current conditions index, which takes stock of Americans’ view of their personal finances, climbed to 109.9, the highest since January 2007, from 106.7, Bloomberg reported.

Consumer spending in the US is an integral part of economic demand, accounting for two-thirds of the total demand in the country. Following certain signs of recovery, the consumers feel to spend more on everything- cars, restaurants, business, clothes and lots more, helping to kickstart the economy.

"Despite the meager GDP growth as well as a higher inflation rate, consumers became more optimistic about their financial prospects and anticipated a somewhat lower inflation rate in the years ahead," said Richard Curtin, Chief Economist, University of Michigan, Survey of Consumers Department.

Friday’s report showed a measure of consumers’ sentiment of current economic conditions rose to 109.9 in May from 106.7 in April. A measure of consumer expectations about conditions in the coming months rose sharply to 84.9 from 77.6.

"Overall, the data indicate that inflation-adjusted consumer expenditures can be expected to rise by 2.5 percent in 2016 and 2.7 percent in 2017,"Mr. Curtin said in his statement.

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