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US Consumer Sentiment Sputters

Analysts blame decline on higher gasoline prices.

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By: TOM BRANNA

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The high-flying US stock market is in contrast to US consumer sentiment, according to data from a recent survey by Thomson Reuters and the University of Michigan.


The decline was blamed on higher gasoline prices. The Thomson Reuters/University of Michigan’s preliminary reading on the overall index on consumer sentiment slipped to 74.3 from 75.3 in February, contrary to economists’ forecasts for a gain to 76.0.


Still, consumers did not expect the run-up in gasoline prices to last very long and anticipated further gains in employment this year.


The survey’s one-year inflation expectation accelerated to its highest since last May at 4.0% from 3.3% last month. The gain in the five-to-10-year inflation outlook was more muted, edging up to 3.0% from 2.9%.


“I think the overriding message is we can handle gas prices at their current level but if they go any higher it’s going to be a problem,” said Christopher Low, chief economist at FTN Financial in New York.

U.S. stocks cut gains immediately following the data and were trading little changed in the early morning.

The barometer of current economic conditions edged up to 84.2 from 83.0, while a gauge of consumer expectations fell to 68.0 from 70.3.

Increases in employment were reported by 38% of respondents, a record high for the third straight month.

There was also a divide between lower-income Americans and higher earners. Concerns about higher gas prices dominated the responses of lower-income households, while employment and wage gains were the focal point of consumers with incomes over $75,000.

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