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Consumer Sentiment Weathers February Chill

Days after the Conference Board recorded a downturn in consumer confidence, the University of Michigan and Thomson Reuters put out their own index, which suggested just the opposite.

Surveys of Consumers’ Index of Consumer Sentiment picked up to 81.6 in February, a 0.5 percent month-over-month improvement and a gain of 5.2 percent year-over-year.

Sentiment last month was impacted by a 2.1 percent improvement in consumer expectations offset by a 1.4 percent drop in sentiment about current conditions—reflective of an increase in heating costs as winter weather continues to beleaguer parts of the country.

However, while snowed-in Americans may not have been able to get out to do their spending, data suggest purchases were merely postponed, not canceled—especially as buying conditions remain largely favorable on big-ticket items.

“Low interest rates rather than low prices are now the main appeal for most consumers. Home buying and selling attitudes remained largely unchanged, with low mortgage rates dominating low prices as the main attraction,” the group said.

Though February’s improvement was small, the results could have been worse, says Surveys of Consumers chief economist Richard Curtin.

“Consumers have displayed remarkable resilience in the face of the polar vortex as well as higher utility bills and minimal employment gains,” Curtin said. “This reaction stands in sharp contrast to the instability in confidence associated with the government shutdown and policy stalemates in the past few years.”

“Without another self-inflicted DC shock in the off-year election, consumers are prepared to renew the pace of spending in the months ahead, with an overall gain of 2.6 percent in 2014,” he added.

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