Consumer Confidence Dips In April

Consumer Confidence in the U.S. retreated for the third straight month in April as concerns about the labor market and future business conditions grew, according to a report from the Conference Board. 

The Consumer Confidence Index was 97.0, down from March’s 103.1. Despite the three months of weakness, the gauge continues to move sideways within a relatively narrow range that's largely held steady for more than two years, officials with the Conference Board said. 

The Present Situation Index — based on consumers' assessment of current business and labor market conditions — declined to 142.9 (1985=100) in April from a downwardly revised 146.8 in March. Meanwhile, the Expectations Index—based on consumers' short-term outlook for income, business, and labor market conditions—fell to 66.4 from a slightly upwardly revised 74.0 last month. An Expectations Index reading below 80 often signals a forthcoming recession.

"Despite April's dip in the overall index, since mid-2022, optimism about the present situation continues to more than offset concerns about the future,” said Dana M. Peterson, chief economist at The Conference Board.

Confidence declined among consumers of all age groups and almost all income groups except for the $25,000 to $49,999 bracket. Nonetheless, consumers under 35 continued to express greater confidence than those over 35. In April, households with incomes below $25,000 and those with incomes above $75,000 reported the largest deteriorations in confidence. However, over a six-month basis, confidence for consumers earning less than $50,000 has been stable, but confidence among consumers earning more has weakened.

"According to April's write-in responses, elevated price levels, especially for food and gas, dominated consumer's concerns, with politics and global conflicts as distant runners-up,” she said. Average 12-month inflation expectations remained stable at 5.3% despite concerns about food and energy prices."

While consumers continued to rate current business conditions positively, their views of the current employment situation weakened, with fewer consumers saying that jobs are plentiful and more reporting jobs are hard to get. Meanwhile, expectations for the next six months slipped to the lowest level since July 2022, driven by a more pessimistic outlook for future business conditions, labor market conditions, and income expectations. 

Expectations that stock prices will increase over the year ahead declined slightly, after rising every month since November of last year. Meanwhile, the share of consumers expecting higher interest rates over the year ahead rose again, to 53.8% in April. On a six-month basis, buying plans for homes and big-ticket appliances, which are interest-rate sensitive, continued to soften. Vacation plans also decreased to the lowest level since June 2023, with planned trips both within the US and abroad declining.