Consumer Sentiment Rises To Three-Month High, Surprising Analysts

After two years of growing uncertainty, consumer sentiment in the United States hit a surprising three-month high in early April.  With job growth numbers and wages both looking optimistic in the months to come, analysts say they are seeing a boost in consumer sentiment, which should help to offset the highest period of inflation in about ten years.

Still, consumers expect inflation to jump 5.4 percent over the next several months, possibly through the end of the year.  And the forecast for the next five to ten years is only a little better, at a steady 3 percent.  This would suggest, then, that analysts do not foresee inflation getting any worse in the very near future.

What we can possibly foresee, however, is the potential for wages to increase across the country, as employers look to entice more people to rejoin the workforce.  Combined with a drop in gas prices, inflation-adjusted incomes have helped to improve overall sentiment among consumers.

Specifically, impressive employment gains have bolstered wage expectations, particularly among workers younger than the age of 45.  This should result in household incomes rising 2.7 percent, the biggest such jump in more than 15 years.

On the other hand, inflation continues to strain the average American budget.  Even as wages are increasing, inflation is making it difficult to afford basic daily necessities like groceries and gas.  While prices for some goods do seem to be on a downswing, heftier grocer bills will continue to drag on American pocketbooks.

Data from the middle of April shows that consumer prices in the United States rose by 8.5 percent in March. This marks the biggest CPI jump since the latter part of 1981.  The same data indicates that producer prices for the same month have increased the most since 2010.  In a different report, released on Thursday, retail sales were up just a half a percent in March, with gasoline purchases leading that metric.

All in all, this most recent data should help to ease any worries about an encroaching recession.  Aggressive inflation strategies from the Federal Reserve, however, could still make that recession a possibility.