Consumer Sentiment Index Jumps Slightly in JanuaryIt was a mixed week for U.S. economy as initial jobless claims unexpectedly rose, but both U.S. GDP growth and a key consumer indicator showed signs of strength: The consumer sentiment index rose to 74.2 for the final January reading, 1.2 points above the month's preliminary reading, but slightly below December's 74.5 tally.

Economists surveyed by Bloomberg had predicted the sentiment index would total 73, up from its readings of 71.6 in November and 67.7 in October. At the start of the recession in December 2007, the index was at 88.9.

U.S. GDP grew at a 3.2% pace in the fourth quarter, less than the 3.5% Bloomberg estimate, but faster than the 2.6% pace of growth of the third quarter. The stronger growth rate makes it more likely the U.S. economic recovery will progress to a self-sustaining expansion. The stock markets, however, are reacting badly today to the lower-than-forecast GDP report as well as to some earnings reports that disappointed investors.

That stronger U.S. economy helped boost the spirits of consumers, with the federal tax cut extension and hopes about an improving job market offsetting concerns about rising gasoline and food prices.

Tax Cut Extension Helps Boost Mood

"The tax cuts, nonetheless, helped to improve overall prospects for the national economy, including job prospects," Richard Curtin, director of the Thomson Reuters/University of Michigan survey, said in a statement, Reuters reported.

There were two additional bright spots in the final January sentiment report. The consumer expectations component rose to 69.3 -- its highest level since June -- from the 68.2 preliminary January reading and 67.5 in December. Also, the 12-month economic outlook component, although unchanged at 87, nevertheless remained at its highest level since September 2009.

However, the current economic conditions component of the index dropped from 85.3 in December to 81.8 in the final January tally, though it was higher compared to the 79.8 preliminary reading.

Also, the one-year inflation outlook rose to 3.4% in January from 3% in December and November, and 2.7% in October. The five-year inflation outlook rose to 2.9% in January, after registering three straight months at 2.8%.

January's consumer sentiment index result can be categorized as a qualified positive. On one hand, consumers are concerned about the large jump in gasoline prices, and the seemingly continuous gradual increases in food prices -- two trends can cut substantially into households' disposable income. On the other hand, consumers see encouraging signs in the stronger economy, solid corporate earnings, and in a job market in which the period of large layoffs appears to be over.

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Foltynski Family

Unexpected, better than expected and worse than expected.... I am tired of this crap!

January 30 2011 at 9:12 PM Report abuse +2 rate up rate down Reply
martinsportraits

Why do we have to be subjected to Lazarro and his bought and paid for journalism , One fluffy, happy feel good story after another ...please stop this nonsense , its insulting!

January 30 2011 at 6:42 PM Report abuse +2 rate up rate down Reply
AZ Stang

The biggest indicator wasn't even mentioned: the closer we got to the November elections, it was evident democrats were going to lose LOTS of seats. That's when America started to relax a little bit. Then America won (for the most part) in November, and consumer confidence continues to rise. The farther we get from having unwanted programs shoved down our throats (Obamacare) just to satisfy egos, the the better.

January 28 2011 at 8:14 PM Report abuse +1 rate up rate down Reply
HAPPY JACK

WHAT A LYING A S YOU ARE, YOU MUST BE GETTING YOUR POLL RESULTS FROM A WELFARE OFFICE...PEOPLE STANDING IN LINES TO RECEIVED MORE OF THIER FREE FOOD STAMPS OR A WELFARE CHECK.......

January 28 2011 at 5:37 PM Report abuse rate up rate down Reply
bhawkes328

ANOTHER BS ARTICLE GO JOB JOE

January 28 2011 at 3:46 PM Report abuse +5 rate up rate down Reply
1 reply to bhawkes328's comment
mullermugs32

I'm assuming the results were unexpected as usual also.

January 28 2011 at 8:33 PM Report abuse +3 rate up rate down Reply
hustonlaw

The actual result for consumer sentiment is flat, no matter how you twirl it. The recession and home price depression continues unabated in Nevada (and the abutting States), and foreclosures are still the orders of the day. One day, perhaps, the lenders, homeowners, Congress and the Administration will join together in a national confab to determine how to end the foreclosure spiral. To me it's commonsensical: develop a policy of lowering principal balances for home loans for, say, five years, and provide that if markets improve, both the lender and the homebuyer will benefit from the equity improvement, and Uncle Sugar will stop shoveling taxpayer dollars out the door in the names of Freddie and Fannie - in short, everyone will have skin in the game.

January 28 2011 at 3:42 PM Report abuse +1 rate up rate down Reply
socialeconomics1

so, a bunch of stay at home moms and fast food workers were surveyed and in their educated opinions expect better days ahead for the US economy.... so everything is ok then

January 28 2011 at 1:13 PM Report abuse +1 rate up rate down Reply