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WASHINGTON — Steady hiring and higher incomes have helped boost consumer sentiment according to the University of Michigan. The school’s index of consumer sentiment rose to 94.7 in May, it’s highest reading in nearly a year.
Consumer spending accounts for nearly 70 percent of U.S. economic activity. More optimistic consumers generally spend more which will likely boost U.S. economic growth.
That would be a welcome outcome as the economy slowed to a crawl in the first three months of this year, growing at just 0.8 percent.
Inflation is also less of a concern to people. Fewer people complained about price increases than at any time since 2003 and more people enjoyed income gains than at any time since late 2000.
People are also confident that their houses will continue to appreciate and that they can sell at healthy prices. That will help consumers, giving them more equity in homes and giving owners more money for a downpayment to upgrade their homes if they choose.
The one area of concern for consumers was the presidential election, according to the study. That concern could dampen spending in the short term as the economic policies of the next president were cited by consumers as their biggest uncertainty.
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