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Americans' sentiment in current conditions has never been higher, according to University of Michigan's latest survey. On the heels of small business exuberance, the headline UMich print jumped to its highest since 2004.

While 'hope' faded modestly (from 90.0 to 88.6), current conditions exploded from 114.9 to a new record high at 122.8...

 

Quite stunningly, UMich notes that All of the gain in the Sentiment Index was among households with incomes in the bottom third (+15.7), while the economic assessments of those with incomes in the top third posted a significant monthly decline (-7.3). The decline among upper income consumers was focused on the outlook for the economy and their personal finances.

Short-term inflation expectations also jumped to 2.9% - the highest since March 2015...

Importantly, UMich notes that interest rates were expected to increase by the largest proportion since 2004. These trends have prompted consumers to more favorably cite buying as well as borrowing in advance of those expected increases. While this may be the first tentative step toward an inflation psychology, this transformation requires continuously increasing incomes to support rising spending. While income gains are anticipated by consumers, the March survey found that the size of the expected income increase returned to the lows recorded in the past year.

Finally, we note that expectations that stocks will rise over the next 12 months fell for the 2nd month in a row...