Lower oil and gasoline prices and favorable economic news propelled the consumer sentiment indes to its highest level in 3 years, providing more evidence that the U.S. economy is poised for more growth in 2007.
The preliminary January reading on sentiment by the Reuters/University of Michigan Surveys of Consumers rose to 98.0 from 91.7 at the end of December.
This was the highest since 103.80 in January 2004 and well above the 92.5 median forecast of analysts polled by Reuters.
“Consumers reported more favorable assessments of their personal finances and anticipated a higher rate of economic growth,” said Richard Curtin, director of consumer surveys at the University of Michigan, in a statement
However, in the world of interest rates and inflation, this good news could end up being bad news, as it puts yet more pressure on the Federal Reserve to keep inflation in check by keeping interest rates on the high side
“This was a nice upside surprise that continues the run of generally favorable U.S. data that have tempered concerns about the health of the economy. This will further put to rest the notion of an early Fed rate cut,” said Alex Beuzelin, senior market analyst at Ruesch International in Washington, DC.
We’ll keep our fingers crossed.
Courtesy of Reuters/Yahoo. Read the whole article here.