Consumer sentiment in the United States increased in February to a three month high that helped preserve the gains in household spending. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment went up to 76.3 in February compared to 73.8 the previous month. The reading was estimated to increase to 74.8 according to the average forecast in a poll made by Bloomberg.
Increased property values, stocks at five year highs, and an improving job market bolstered Americans’ balance sheets. The increase in wealth would help make up for recent gains in gasoline prices and the hit to take-home pay due to the two percentage-point increase in the payroll tax.
Stocks were slightly affected by the report. Standard & poor’s 500 index dropped less than 0.1 percent to 1,521.13. Manufacturing is seen to be improving as well. The Federal Reserve Bank of New York reported its general economic index went up to 10 in February, which is the highest since May from minus 7.8 in the past month. Readings greater than zero indicate expansion in New York, southern Connecticut, and New Jersey.
The report showed factories rebounded after a drop in January. Industrial production at factories, utilities and mines dropped 0.1 percent in January after a 0.4 percent increase. Manufacturing declined 0.4 percent last month after getting the biggest two month advance since 1984.
Estimates of the 65 economists polled by Bloomberg ranged from 70 to 78. The index got an average of 64.2 during the last recession and 89 in the five years before the 18 month economic slump that ended in June 2009.
The report is similar with Bloomberg’s weekly Consumer Comfort Index that went up to minus 35.9 in the period that ended February 10 from minus 36.3 the past week. Michigan survey’s index of current conditions that assesses how Americans perceive their financial situation and whether they think it is a good time to buy costly items such as cars increased to 88 from a six month low of 85 in the previous month.