WASHINGTON — Consumer sentiment changed markedly during March, climbing to the highest level since November, led by cheerier views on current economic conditions, according to data released Friday.
The University of Michigan-Thomson Reuters consumer-sentiment gauge rose to a final March reading of 78.6 — the highest level since November — from a final February reading of 77.6.
Economists polled by MarketWatch had expected a final March reading of 73, with concerns about the government’s economic policies taking a toll. A preliminary March reading pegged the level at 71.8.
The Conference Board earlier this week released a consumer confidence report that showed a sharp decline.
But it appears that consumers have pushed aside at least some of those concerns over the large federal spending cuts making up the sequester.
“Consumers have discounted the administration’s warning that economic catastrophe would follow the reductions in federal spending, and consumers have renewed their expectation that gains in employment will accelerate through the rest of 2013,” said Richard Curtin, the survey’s director, according to a Reuters report.
But economist Chris Christopher at IHS Global Insight warned about the impact of partisan discord on consumers.
“It is very obvious that political bickering and dysfunctional government are not positives for consumer mood,” Christopher wrote in a research note. “Looking ahead, consumer confidence is likely to gain some traction; however, if debt ceiling debates get ugly or if there is a government shutdown, all bets are off.”
Consumers have also seen rising stock prices and good jobs news. The S&P 500 closed at a record high on Thursday, and the economy has added an average of almost 200,000 jobs per month in the past three months.
The sentiment gauge, which covers how consumers view their personal finances, as well as business and buying conditions, averaged about 87 in the year before the start of the most recent recession. Economists watch sentiment data to get a feel for the direction of consumer spending, and have been concerned about the impact of higher payroll taxes. But the government reported Friday that consumer spending rose in February.
According to the sentiment report, a gauge of consumers’ views on current conditions increased to 90.7 in March from 89 in February. Meanwhile, an expectations gauge ticked up to 70.8 from 70.2.