Consumer sentiment in February rebounds after shutdown
National Housing Conference CEO David Dworkin on the potential economic impact of the partial government shutdown.
U.S. consumer sentiment rebounded in February after the end of the 35-day partial government shutdown, the longest in U.S. history, according to preliminary data from the University of Michigan consumer sentiment index.
The index revealed that in February, consumer sentiment rose to 95.5, exceeding expectations of 93.7, according to a Bloomberg survey. That’s a 4.3 point increase from 91.2 in January, which was the worst level since November 2016.
According to a statement from the University of Michigan, the gains largely reflect optimism about the end of the shutdown and a “fundamental shift in consumer expectations due to the Fed’s pause in raising interest rates.”
"Although the majority of consumers expected some additional rate hikes during the year ahead, that proportion has shrunk to the smallest level in the past two years," the statement.
During their January meeting, policymakers at the U.S. central bank signaled a dovish approach to interest rates moving forward amid growing concerns about a potential global slowdown.
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"We still see sustained expansion of economic activity, strong labor conditions and inflation near 2 percent," Fed Chair Jerome Powell said at the time. "But the crosscurrents suggest a less favorable outlook."