Consumer sentiment rose in February to its highest level in three months on an improving stock market and hopes for continued job gains, according to the University of Michigan-Thomson Reuters consumer sentiment gauge.
February’s final reading of 77.6 – the highest level since November – rose from a January reading of 73.8.
According to survey results, conflicting forces worked on consumers in February: gasoline prices increased, but claims for jobless benefits fell. Additionally, higher payroll taxes kicked in this year and consumers face continuing uncertainty about how federal spending cuts will impact their personal finances.
“Expected job gains have partially offset concerns about higher payroll taxes and the impending reduction in federal spending,” said Richard Curtin, the survey’s chief economist. “Unfortunately, those expected job gains will be harder to actually accomplish given that the economy faces weakened consumer demand due to lower take-home pay as well as reduced federal spending and employment.”
Despite February’s gain, sentiment levels remain below prerecession readings. Less than one-third of surveyed households said they expect finances to improve in the coming year.