Consumer confidence rose 1.7 points to 128.7 in April, surprising consensus which anticipated a decline. The index improved in April for both the present situation and expectations.
Consumer Confidence Rises to Second Highest of the Cycle
The Conference Board’s measure of consumer confidence rose to 128.7 in April from 127.0 in March. April’s reading is the second highest of the cycle after February’s print of 130.0. The move in April was unexpected as consensus had anticipated another decline on continued uncertainty surrounding trade policy. Consumers appear to have already shaken that concern, which did weigh on confidence in March. April was a stronger month for consumers’ assessment of the present situation and expectations. Much of the improvement resulted from fewer unfavorable responses regarding the labor market and business conditions.
The index measuring consumers’ assessment of the present situation rose to 159.6 in April from 158.1 in March. April’s present situation index is also at its second-highest level of the cycle, having reached its height in February. The uptick in April was because the share of respondents with a neutral assessment of business conditions and current job availability both rose. Fewer respondents appraised current business situations as ‘bad’ and ‘good’. Similarly, the share viewing jobs as ‘plentiful’ declined, and the share saying jobs are ‘hard to get’ declined. The greatest share of respondents appraised the labor market as ‘jobs not so plentiful’, which is the balanced view.
Consumers’ expectations index improved to 108.1 in April from 106.2 in March. There was an increase in the share of consumers expecting better business conditions in six months and a decrease in the share expecting conditions to worsen. That movement contrasts March, when uncertainty stemming from trade rhetoric and volatility in the stock market likely dampened expectations for some consumers. The share expecting better conditions has almost recovered to February’s level. Consumers’ expectations for job availability in six months were also more favorable in February, as a larger share answered they expect more jobs. The share expecting fewer jobs in six months held steady at 12.5 percent. Income expectations were also more favorable in April on net. That improvement was also due to a more balanced assessment this month, as the share expecting income to increase in six months declined, but the share expecting it to decrease also declined.
The takeaway from the April print is that consumers appear to have already moved on from the increase in uncertainty we saw in March. Their high level of confidence bodes well for a rebound in consumer spending in coming months. The prospect of rising interest rates is not lost on consumers, as the share expecting higher rates next year rose to 72.2 percent in April. The return of volatility to the stock markets has brought the share expecting higher stock prices next year from 51.0 percent in January to 32.7 percent in April, which is in line with the share expecting no change and those expecting a decrease. Some consumers appear to be planning major purchases before interest rates rise. The share planning to purchase a home in the next six months rose to its cycle high in April. The share planning to buy an automobile or make a major appliance purchase also rose noticeably.
