Consumer Sentiment

Apropos of my post earlier this morning, suggesting that all of us in the thick of the economic commentariat are too invested in outcomes to be able to discern the economy's direction clearly, have a look at the latest results from the University of Michigan consumer confidence survey. Confidence in April rose for a second straight month and by more than expected.

Particularly interesting to me is the fact that inflation expectations for the next 12 months increased, from 2% in March to 3% in April. Expectations are still pretty firmly anchored -- the outlook for inflation over the next five years is a 2.7% annual increase -- but the fact that consumers don't foresee near term deflation (which might be expected given recent flat-to-negative price data) is a good sign.

Standard disclaimers apply. The situation is fragile, broadly speaking the economy is still contracting, and even after a bottom labor markets will continue to deteriorate for months. But these kinds of data points do help shed a light on the administration's "first do no harm" policy approach of late.