Feb 13 2015

Rate Range Projection by Bank

 Next week 118.50- 120.50

 Next 3 months 112.00 - 127.00

 

Factors that economists had expected would buy consumer spending in the months ahead. The ebb in sentiment came despite strong job gains over the last three months, signs of an acceleration in wage growth as well as cheaper gasoline prices, factors that economists had expected would buy consumer spending in the months ahead."As it stands, the pullback in confidence, along with the early-year decline in retail sales, hints of slower consumer spending growth in the first quarter," said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto. The University of Michigan said on Friday its consumer sentiment index slipped to 93.6 in early February from a reading of 98.1 in January.

 

Still, the index was at the second highest level since January 2007. Economists had expected the sentiment index to hold steady. U.S. financial markets were little moved by the data. Households were in early February less upbeat about current economic conditions as well as the outlook over the next six months. The survey also showed a fairly big fall in household intentions to purchase long-lasting manufactured goods, while plans to buy automobiles were little changed. There was also some softening in income expectations. "Increased savings is a possible explanation for why consumption has disappointed in recent months despite consumers receiving a windfall from the drop in gasoline prices, but it is hard to really know what to make of the responses to this question because it was last asked in 2010." A special question in the survey showed a greater propensity to save, which could explain the recent weakness in retail sales. Daniel Silver, an economist at JP Morgan in New York, said "The decline in income expectations is an unfavorable sign for consumer spending".