U.S. consumer sentiment jumped in the second half of March by a record amount as Americans discounted the effects of government spending cuts and saw more healing in the labor market, a survey released on Friday showed.
The Thomson Reuters/University of Michigan's final reading on the overall index on consumer sentiment came in at 78.6, up from 77.6 the month before.
That was well above the median forecast of 72.5 among economists polled by Reuters and a record upward revision from a preliminary reading of 71.8 in mid-March.
Analysts had fretted that the so-called sequester, a package of across-the-board government spending cuts of $85 billion that went into effect in early March, would drag on the economy and dampen sentiment.
But consumers seemed to have brushed those worries off, survey director Richard Curtin said in a statement, and the swell of sentiment in the second half of the month more than erased the decline of the first half of March.
"Consumers have discounted the administration's warning that economic catastrophe would follow the reductions in federal spending, and consumers have renewed their expectation that gains in employment will accelerate through the rest of 2013," he said.
"If the late March results are replicated in the months ahead, however, the economy may finally gain enough upward momentum to significantly reduce the unemployment rate."
The survey also saw the largest proportion of homeowners reporting recent increases in home values in more than five years, with gains expected by more homeowners than anytime since the March 2007 survey.
The survey's barometer of current economic conditions rose to 90.7, its highest since January 2008. It was also up from February's 89 and above a forecast of 87.8.
The survey's gauge of consumer expectations rose to 70.8, revised up from a preliminary 61.7 and up from February's 70.2. Economists had forecast 62.
The survey's one-year inflation expectation fell to 3.2 percent from February's 3.3 percent, while the survey's five-to-10-year inflation outlook was at 2.8 percent versus 3 percent.
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Nationally, the average gas price hit a recent high of $3.74 per gallon, nearly $0.50 higher than it was on Jan. 1. According to website GasBuddy.com, that's about a 14 percent increase since the start of the year.
The start of the new year also marked the end of the temporary 2 percentage point tax break on Social Security contributions. Once that part of President Obama's stimulus package expired, your paychecks went back to being 2 percent smaller. For the average family, that adds up to about $1,000 a year.
That same "average family," by the way, already earns only about $50,000 a year today. And according to CNN, that's about $4,000 less than you were earning in 2000.
A disconcerting report from Sallie Mae last week showed that about one-third of Americans working toward retirement are having to raid their retirement savings to pay for their kids' college educations.
According to a poll commissioned by Bankrate.com (RATE) in February, only 55 percent of Americans have enough money tucked away in their savings accounts and "emergency funds" to cover the amounts owed on their credit cards.
That Bankrate poll also revealed that among women in particular, 51 percent actually owe more on their credit cards than they have cash in the bank. Digging deeper into the data, Bankrate reported that while high earners are doing well, and generally flush, most people (59 percent) who earn less than $30,000 annually owe more on their cards than they have in savings. And these are the people least able to afford the high cost of credit card interest.
Speaking of earnings -- and jobs -- the same unemployment report that set Wall Street to cheering Friday can be looked at from a glass half empty perspective as well. The new, lower unemployment level of 7.7 percent is the best number we've seen since the Great Recession ended. However, The Wall Street Journal points out that 7.7 percent is very close to the worst unemployment ever got (7.8 percent) in the 1991 recession. Our best number in years is within a whisker of the worst they faced back then.
The overall workforce participation rate -- the percentage of Americans currently earning wages at all -- currently stands at just 63.5 percent. According to the Bureau of Labor Statistics, that's much worse than what we saw in the 1991 recession. It's the lowest we've seen since the recession that hit during the Carter administration.
Little wonder, then, that according to the Bankrate survey, people are increasingly concerned about "job security." Friday's unemployment report may suggest that the jobs market is on the mend, but most people (59 percent) say they feel no more or less confident in their employment situation today than they did a year ago. Among those polled whose opinions have changed, 23 percent said they feel "less secure today" than they did a year ago, versus 19 percent who feel more secure.
That doesn't exactly jibe with the story that things are getting better.
It's great news for folks who own stocks, no doubt, and according to the Journal , more than 90 percent of people earning $100,000 or more do. But what about the rest of us? Fewer than 46 percent of Americans earning less than $50,000 are invested in the stock market -- and remember, "$50,000" is the average income in America today.
So yes, It turns out for the average American, things may not be getting better at all.