By Dow Jones Business News, March 01, 2013, 11:12:00 AM EDT
(Updates with commentary throughout)
By Cynthia Lin
U.S. consumers felt even better about the economy last month than originally thought despite facing higher taxes and
prices at the pump, according to a final-February gauge on sentiment released Friday.
The Thomson-Reuters/University of Michigan consumer sentiment index rose to 77.6 from a preliminary reading of 76.3,
according to an economist who has seen the report. The index is at its highest level since November.
Economists surveyed by Dow Jones Newswires had expected the final February reading to come in unchanged at 76.3.
"Despite looming sequestration, consumer survey data is strengthening, which will positively impact retail sales,"
wrote the economists at Contingent Macro Advisors.
The sequestration is a $85 billion set of federal spending reductions due to take effect later Friday unless U.S.
lawmakers reach a deal to avoid it. But with no sign of a resolution, some economists worry that the spending cuts will
weigh on consumers' confidence in the coming months.
"The nearly 10-point drop in confidence in December to 72.9 was related to uncertainty regarding how Congress and the
Administration would handle" a mix of spending cuts and tax increases, warned Terry Sheehan, economic analyst at Stone &
McCarthy, referring to the fiscal cliff. "The first hurdle of the tax laws was passed....Now consumers have a new worry,
and one that appears harder to fix."
For now, fiscal uncertainties don't appear to be rattling consumers' nerves yet. The final-February sentiment reading
showed a broad rise across indexes within the report.
The current conditions index increased to 89.0 from a preliminary reading of 88.0. The expectations index rose to 70.2
from 68.7. Each reading stands at its highest level since November.
Despite higher gas prices, the one-year inflation expectations reading stayed steady at 3.3% at the end of February.
The inflation expectations covering the next five to 10 years remained at 3.0%.
Write to Cynthia Lin at firstname.lastname@example.org
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