A University of Michigan report suggests that the consumer sentiment index has risen to its highest levels since January, possibly indicating a return of significant economic growth throughout the country. The index was measured at 96.1 out of a maximum of 100 for June, rising by exactly 6 points from its May measurement.
The consumer sentiment index, published monthly by the University of Michigan, is a consumer confidence indicator which measures consumer opinion about both current economy and their financial situation. It is completed through extensive telephone interviews regarding those topics and only reflects the situation in continental United States.
“The gain in confidence is due to both an improving economy from the consumer perspective, but it also may reflect the acceptance of the diminished economic prospects in the years ahead” said Richard Curtin, director of the University of Michigan’s survey.
This month’s reading was the highest since January, when the index reached a staggering 98.1 percent, and all of this year’s measurements were the highest recorded since 2004, in pre-financial crisis times. Overall consumer spending also increased 3 percent in 2015 until now since last year.
Most of the spending increase came in the last months, with it rising in May by 0.9 percent, after a cautious start to the year which could be attributed to the harsh winter many zones suffered. If consumer confidence is an indirect way of studying economic growth and recession, increases in consumer spending certainly signify better financial fortunes for most of the country.
Consumer spending is set to increase even more during the summer months, with holidays and vacations being taken into account. Overall, these show promising signs for the country’s economy overall.
One of the main causes of growth in both cases is an increasingly stabilizing labor market, with more than 3.1 million jobs being added since last year and unemployment rates dropping down by nearly 1 percent. This also translated into the United States having a larger labor force overall.
However, this apparently better financial situation might prompt the US Federal Reserve to raise the interest rate for the first time in seven years, which it held at 0 since near the beginning of the financial crisis in 2008. The rate hike is expected to happen somewhere during the latter financial quarters of 2015, with many analysts pointing to September as the most probable time, even though the measure is criticized by businesses who point out that it might actually hinder further economic growth.
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