Higher Income Households Drive Consumer Confidence Surge
Households with incomes above $50,000 feel pretty confident, according to the latest Index of Consumer Sentiment reading published by the University of Michigan's Survey of Consumers.
The report, released March 31, put the Index at 88.9, a substantial 2.2-point rise over February's reading. Same period last year, the reading was stronger, at 92.6.
Among households with incomes above $50,000, the Index rose 5.1 points in the current survey. For households below that figure, the Index was off 0.4 points. The disparity between the two groups, we believe, suggests such things as energy pricing and job security are weighing much more heavily on lower income households.
"Upper income households were half as likely as lower income families to report that their financial situation had been significantly weakened by higher prices, and higher income households were three times as likely to anticipate increases in their real incomes during the year ahead,"
Richard Curtain, director of
consumer surveys, said in a written statement.
A future-oriented component of the overall Index, the Index of Consumer Expectations, rose to 76 in March, up slightly from the preceding month but far short of the 82.8 recorded in March of 2005.
Among other findings: Households across all economic levels tend to believe economic growth will cool in the second half of the year. And although survey responses don't suggest a serious downturn anytime soon, half of respondents indicate they expect a downturn sometime within the next five years.
Consumers indicated price discounts would remain important in their purchase decisions for homes, vehicles, appliances and furniture. New residential investment, meanwhile, is expected to decline, and home-equity cash-outs are expected to slow down, according to Curtin.