U.S. Consumer Sentiment Improves More Than Expected In April

(RTTNews) - Consumer sentiment in the U.S. has improved by more than expected in the month of April, according to a report released by the University of Michigan on Friday.

The report showed that the preliminary reading on the consumer sentiment index for April came in at 95.9 compared to the final March reading of 93.0. Economists had expected the index to edge up to 94.0.

With the bigger than expected increase, the University of Michigan said the consumer sentiment index reached its second highest level since 2007.

The bigger than expected increase by the index reflected improvements in consumer expectations as well as the assessment of current conditions.

The index of consumer expectations rose to 88.0 in April from 85.3 in March, while the current economic conditions index climbed to 108.2 from 105.0.

Richard Curtin, the survey's chief economist, said, "While there were some important exceptions, the cumulative improvement in a broad range of economic assessments are now comparable to the peak levels recorded in the mid 2000's."

"The major exception has been in the expected size of future income gains," he added. "While expected income gains have improved over the recent recession lows, they have remained quite weak."

Curtin also said consumer spending has become increasingly dependent on low interest rates but noted that few consumers expect the Federal Reserve to raise rates enough to affect their purchase plans.

On the inflation front, one-year inflation expectations tumbled to 2.5 percent in April from 3.0 percent in March. The five-year inflation outlook also edged down to 2.6 percent from 2.8 percent.