NEW YORK (Reuters) - Consumer confidence rebounded to its highest level in 13 months at the end of March as optimism about jobs and income overcame higher prices at the gasoline pump, according to a survey released on Friday.
The Thomson Reuters/University of Michigan’s final March reading for the overall consumer sentiment index rose to 76.2, the highest since February 2011, from 75.3 in February.
The final March figure rose from a preliminary reading of 74.3 and was above economists’ median forecasts of 74.7.
“Consumer confidence edged upward as more favorable income and job trends offset rising gas prices,” survey director Richard Curtin said in a statement.
Consumer confidence is seen by some economists as a proxy for future consumer spending. Consumer spending accounts for two-thirds of the U.S. economy.
Earlier Friday, the U.S. Commerce Department said personal spending rose by a bigger-than-expected 0.8 percent month over month in February, the largest monthly rise since July.
The University of Michigan surveys’ barometer of current economic conditions ended at 86.0 in March, also the highest level since February 2011. This improved on the preliminary reading of 84.2 and February’s 83.0. Analysts had predicted a reading of 84.5.
More families, at 34 percent in March, reported a better financial situation than anytime in the previous four years, and more consumers than ever before in the long history of the survey, 38 percent, reported hearing of improved job conditions, Curtin said.
Inflation worries, however, curbed hopes about an improving job market. “Expected increases in inflation held down more optimistic expectations as the majority anticipated declines in their inflation adjusted incomes,” Curtin said.
The gauge of consumer expectations was 69.8 at the end of March, above the preliminary reading of 68.0 but below February’s 70.3. Analysts had expected no change for the index from the preliminary figure.
An easing of gasoline prices in late March moderated the earlier spike in inflation worries, Curtin said, but he cautioned they could rise further if gasoline prices resume their increase.
“Gas prices of $4 are no longer shocking; if they approached $5, the impact would be widespread and substantial,” he said, adding $5 a gallon gasoline could hurt car sales.
The survey’s one-year inflation expectation dipped to 3.9 percent from 4.0 percent in early March. It still ended the month at its highest level since last May and up from 3.3 percent in February.
The survey’s five-to-10-year inflation outlook held steady at 3.0 percent versus early March. It was up from 2.9 percent in February.
Reporting by Richard Leong; Editing by Padraic Cassidy