Consumer sentiment increased significantly in March to reach the highest level in more than a year, according to the latest reading of the consumer sentiment index by Thomson Reuters and the University of Michigan. The uptick was driven by greater optimism about personal income and the wider employment situation, despite considerable price hikes at the gas pump. "Consumer confidence edged upward as more favorable income and job trends offset rising gas prices," survey director Richard Curtin said in a statement, according to Reuters. An improving consumer landscape bodes well for the credit market, as it suggests Americans will grow more willing to incur debt, especially on more consumer-oriented debt products like credit cards and auto loans. In fact, a report released earlier this week by TransUnion found consumers are paying down auto loans before credit cards and mortgages. The final March reading for the consumer sentiment index hit 76.2 points, up from 75.3 last month and the highest figure since February of last year. "There does appear to be some pent-up demand being released," Sean Incremona, senior economist at 4Cast, told Bloomberg. "The resilience on the employment front and the higher stock market, it's all off-setting the negative implications of higher gas prices." Furthermore, the Commerce Department reported on Friday [stated] that personal spending increased by a bigger-than-expected 0.8 percent in February, the largest monthly rise since July. However, concerns about inflation remain and have limited hopes for an improving job market. Despite strong gains in employment in recent weeks, few analysts expect the unemployment rate to dip below 8 percent this year. It is currently at a nationwide average of 8.3 percent. Last week, the number of Americans seeking jobless benefits for the first time plummeted last week to the lowest level in nearly four years. "Expected increases in inflation held down more optimistic expectations as the majority anticipated declines in their inflation adjusted incomes," Curtin added. Debt collection
firms have noted major surges in demand in recent months, as consumer debt continues to rise, aided particularly by student loan volumes. The federal government has even begun contracting debt collectors to recover federal student loan dues.