The 1st look at Feb UoM confidence was in line with expectations at 75.1, is up from 74.2 in Jan and is the best since June. The components though were mixed as Current Conditions rose 5 pts to 86.8, the best since Jan ’08 while the Outlook fell 1.7 pts. Importantly, one year inflation expectations held at 3.4%, the highest since Oct ’08. Bottom line, the economic data continues to improve and the consumer is feeling better but it also comes with hints of inflation with US companies having the very difficult balancing act of what to eat in margins and what to try to pass on to the consumer. The question of what the consumer can handle will largely depend upon what wage growth can be achieved.
