Consumer confidence is up this month, according to a report by the University of Michigan. Its Consumer Sentiment Index hit 97.6 in March, up from 96.3 in February. The university’s index of current conditions rose three points to 114.5, the highest reading in more than 16 years.
However, that confidence also came with a mix of uncertainty regarding future economic policies. The combination of optimism and uncertainty is likely to result in uneven spending gains over time and across products, the survey says.
Sentiment was also sharply split across political party lines. Republicans were “much more optimistic” than Democrats about the future: 87% of Republicans expect continued gains in the economy over the next five years, compared with just 22% of Democrats. The Expectations Index among Democrats was at 55.3, signaling that a “deep recession” is imminent, while Republicans’ expectations were at a robust 122.4, indicating strong growth ahead, according to the survey. Those who self-identify as Independents had an Expectations Index of 88.3, nearly equal to the midpoint of partisan difference.
Those surveyed also indicated that they expect the inflation rate in the next year to be 2.4%, compared with 2.7% in the February survey. Over the next five to 10 years, survey respondents project a 2.2% rate of price growth, the lowest reading since 1980.
The University of Michigan’s monthly survey of 500 consumers measures attitudes toward topics including personal finances, inflation, unemployment, government policies and interest rates.