The numbers: The preliminary University of Michigan consumer sentiment index moved higher in March for the second straight month, with the index rising to 97.8 from 93.8 in the prior month.
In January, the index stood at 91.2, which was the worst reading since November 2016. Economists polled by MarketWatch expected a 95 reading.
What happened: The gain in early March was due to households with incomes in the bottom two-thirds of the distribution, said Richard Curtin, the surveys of consumers chief economist. These householders felt better about their personal finances than more wealthy households.
Wage growth has been more pronounced in lower-income households, according to other reports.
All income groups voiced more positive prospects for growth in the overall economy. Year-ahead inflation rates moved lower.
Big picture: The current level of sentiment “hardly indicates an emerging downturn,” Curtin said. Concerns about the economy’s health have been rising a gross domestic product has lost a lot of momentum in the first quarter.
The Atlanta Fed’s tracking estimate has dropped steadily and now shows a gain of only 0.4% in the January-March quarter. Economists are divided about the outlook for the remainder of the year. The sentiment data is upbeat, indicating real consumption will grow by 2.6% in 2019, Curtin said.
What are they saying? “The index is now at a level that is consistent with the range that had held prior to the steep declines in confidence in January and February that were the result of the government shutdown and its effects on financial markets,” said Thomas Simons, senior money market economist at Jefferies.
Market reaction: Stocks were higher in midday trading with the Dow Jones Industrial Average
up more than 100 points.