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US consumer sentiment soars to 2nd-highest level in 14 years

Consumer sentiment in the U.S. strengthened in February to its second-highest level since 2004, driven by optimism on jobs, wages and higher after-tax pay, results of the latest University of Michigan survey showed.

The consumer sentiment index rose 4.2% to a reading of 99.7 last month from 95.7 in January, and increased 3.5% from 96.3 in February 2017.

Current economic conditions went up 4.0% month on month to a reading of 114.9 from 110.5, and the consumer expectations index climbed 4.3% to 90.0 from 86.3.

"Economic news heard by consumers continued to be dominated by the tax reform legislation and net job gains, which was untarnished by the consensus view that interest rates would increase and stock prices would remain volatile," said the survey's chief economist, Richard Curtin.

Curtin said consumers were only expecting a modest moderation in the pace of economic growth as a result of rising interest rates.

"Interest rates, even when pushed higher in the weeks and months ahead, will not cause postponement of discretionary purchases as long as income continues to rise near its present pace," Curtin said.

Consumers anticipate an unemployment rate of below 4% for 2018, with modest wage growth, according to Curtin. Inflation expectations were unchanged.

The latest survey data indicated an expected 2.9% gain in real personal consumption expenditures this year, Curtin added.

On Feb. 27, the Conference Board reported that its consumer confidence index reached its highest level since 2000.