US consumer confidence has been under pressure in recent months and less-confident households are generally inclined to spend less and save more. As private consumption accounts for a majority of GDP growth in advanced economies, household spending is a major determinant of a country’s overall expenditure. Hence the concern generated by these reports.
The latest survey conducted by the University of Michigan indicates US consumers have been somewhat reassured by the end of the US federal shutdown and a likely pause in the raising of official interest rates. The result was a rebound in the University’s Index of Consumer Sentiment from a revised 91.2 in January to 95.5 in February.
The University of Michigan’s index is one of two monthly US consumer sentiment indices, the other being the Conference Board’s Consumer Confidence Survey. The University’s survey covers personal finances, business conditions and buying conditions.
The bounce was a little more than expected but bond and currency markets treated it with a degree of indifference. By the end of the day, 2-year US Treasury yields had gained 2bps to 2.52%, the 10-year yield was 1bp higher at 2.66% while 30-year yields slipped 1bp to 2.99%. The US dollar was largely unchanged against all other major currencies.