(Bloomberg) -- US consumer sentiment rose markedly toward the end of March, supported by strong stock-market gains and expectations that inflation will continue to ease.

The University of Michigan’s sentiment index climbed to 79.4 from 76.5 earlier in the month, reaching the highest since mid-2021, according to the final March reading issued Thursday. The 2.9-point gain from the preliminary reading was the biggest intramonth increase since August 2022.

Americans expect prices will climb at a 2.9% rate over the next year, compared with the 3% expected earlier in the month. They see costs rising 2.8% over the next five to 10 years, the lowest since September.

“Not only did inflation expectations fall sharply, so did inflation uncertainty,” Joanne Hsu, director of the survey, said in a statement, referring to progress in recent months. “As such, consumers are now broadly in agreement that inflation will continue to slow both over the short term and the long term.”

Other data out Thursday showed the government’s two main measures of US economic activity posted strong advances at the end of last year, pointing to an economy that’s still expanding at a healthy clip. A separate report showed pending sales of previously-owned homes in the US recovered last month after declining at the start of the year, adding to evidence that the housing market is gradually improving. 

Hsu said recent readings indicate sentiment is stabilizing as consumers await further direction on the economy pending November’s presidential election. Like the preliminary report, sentiment improved notably among both Republicans and Democrats, but it fell for independent voters.

Consumers’ views about their current personal finances rose to the highest level in over two years, while their present outlook for the economy improved to the best since July 2021. The S&P 500 index has climbed to a record high this month on optimism about corporate earnings.

Both the current conditions gauge and measure of expectations rose to the highest levels since mid-2021.

(Adds graphics and other data out Thursday)

©2024 Bloomberg L.P.