Consumer Sentiment Report Shows Momentum

Consumer sentiment has been showing less strength over the last year than other confidence readings but now the report, driven especially by the assessment of current conditions, is beginning to gain momentum. The preliminary index for March jumped more than 2 points to 102.0 which is a 14-year high.

Current conditions, where strength hints at ongoing gains for both consumer spending and employment, is up nearly 8 points to 122.8 and reflects growing confidence in the lower income bracket. Expectations, which is the other component of the index, is actually down 1.4 points to 90.0 and reflects income doubts among the higher bracket.

A very important sign of strength is in inflation expectations which are up 2 tenths to 2.9 percent for the year-ahead outlook though unchanged at 2.5 percent for the 5-year outlook. Yet the year-ahead gain is an important reading and is likely to be taken notice of at next week's FOMC meeting.