Consumer sentiment improved in February amid a stock market rally and a sharp rise in spending, income, and jobs in January, the University of Michigan’s survey of consumers showed.
Somewhat surprisingly, sentiment among Republicans has shown a huge improvement this year, rising to a higher level than at any time since July of 2021. Sentiment among independent voters has also markedly improved. Among Democrats, who were already registering higher degrees of satisfaction with the economy, sentiment has been mostly unchanged.
The University of Michigan said its consumer sentiment index rose to 67 from 64.9 in January. This was a slight improvement from the 66 reading in the mid-month preliminary assessment. While sentiment remains low by historical standards, it is well above the all-time low hit in June of 2022 when inflation was reaching the highest level in four decades and the economy had contracted for two consecutive quarters.
“After lifting for the third consecutive month, sentiment is now 17 index points above the all-time low from June 2022 but remains almost 20 points below its historical average,” the survey’s director, Joanne Hsu, said in a statement.
Republicans are far more positive about the economy than they were at the close of last year, when many were still in shock after the midterm elections produced disappointing results for the GOP. The index for Republicans rose from 40 in December to 53.9 in February. A year ago, the index was at 50. The low point for the index among Republicans was 33 in June.
The Republicans assumed control of the House in January and after a rowdy intra-party debate, Rep. Kevin McCarthy was elected Speaker of the House.
The improvement for Republicans came in both the assessment of current conditions, which rose from 44.8 in December to 62.3 in February, and expectations for the year ahead, which rose from 37 in December to 48.6 in February.
Sentiment among independents has also improved this year, rising from 58.6 in December to 66.3 in February. Sentiment among Democrats in February is actually slightly below the December result, 79.3 compared with 79.8. The Democrat decline was driven by a slide in expectations from 86 in December to 82.4 in this month’s survey.
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