Washington: A surprisingly optimistic outlook among younger Americans and a higher stock market pushed up a measure of US consumer sentiment in February.
The increase was small, but the harsh winter weather appears to have had little effect on Americans’ confidence so far. That’s a sign that spending might pick up in the coming months.
The University of Michigan’s consumer sentiment index ticked up to 81.6 in February from 81.2 in January. It’s still slightly below December’s figure.
“While the weather made trips to the store more difficult, the data suggest that purchases were postponed rather than cancelled,” the report said. For example, consumers’ home-buying plans were largely unchanged.
The survey also found that Americans under age 35 have grown more optimistic that their pay will increase. On average, they expect income gains of 5 per cent over the next 12 months, the survey found. That’s the largest expected gain since November 2006.
Richard Curtin, director of the survey, said that is a welcome change for an age group that has been particularly hard hit by the recession and sluggish recovery. Unemployment rates for younger Americans have been much higher than for older workers since the recession ended almost five years ago. And their income gains have been weak. Anecdotes of college graduates living with their parents and working low-wage jobs are widespread.
The Michigan survey’s finding provides some hope that such trends might be turning around. In a healthy economy, younger Americans usually anticipate solid income growth as they gain experience and become more productive, Curtin said. Optimism about future income may suggest that more people under 35 are finding jobs and that some who are working are getting promotions, he added.
Still, other surveys haven’t found rising optimism among younger people. In an Associated Press-GfK poll in January, just 38 per cent of those under 35 said they expected their financial situation to improve in the coming year, down from around half who said so through most of 2011 and 2012.
Among Americans as a whole, the expectation is that their paycheques will rise just 0.9 per cent in the coming year. While that matches a six-month high reached in January, it’s still below the inflation rate and is low by historical standards.