Consumer confidence improved a bit in April, although it remains in negative territory overall based on expectations about the back half of the year, according to a Conference Board monthly report.
The Conference Board Consumer Confidence Index gained 0.6 points in April to reach 92.8, up from a 92.2 revised March reading but still below the 100 mark that separates negative from positive sentiments. The Present Situation Index, based on consumer assessment of current business and labor market conditions slipped 0.3 points to 123.8. The Expectations Index, based on consumer short-term outlook for income, business and labor market conditions, rose by 1.2 points to 72.2.
The slip in the Present Situation Index occurred as net views of current business conditions, the share of consumers saying conditions are good versus bad was slightly more negative even as perceptions of employment conditions improved somewhat. In the Expectations Index, perceptions of labor market and household income conditions six months from now edged up, the Conference Board noted, although the reading on business conditions were a little more pessimistic.
In demographic terms, confidence continued to trend downward on a six-month moving average basis for consumers aged 35 and up while younger consumers were more assured in April. By income, confidence on a six-month moving average basis varied though most income groups expressed less optimism.
Consumer plans to buy big-ticket items during the next six months continued to shift from “yes” and maybe in February, to “no” in April. Yet, the proportion saying “yes” remained well above the other responses. Used cars, furniture, TVs and smartphones remained relatively popular items, with furniture the top pick among pricier items consumers expected to purchase, the Conference Board indicated. Purchase plans for all types of home furnishings, white goods and electronics on a six-month moving average basis continued improving through the month. Homebuying expectations enjoyed a mild recovery on a six-month rolling basis for both existing and new units in April, with consumers continuing to prefer existing homes to newly built ones.
As for services, anticipated spending over the next six months fell for every category in April, except for pet care. In general, restaurants/bars/take-out remained the top category for expected purchases, followed by beauty and personal care and streaming/internet/mobile services followed. Travel intentions for six months ahead continued to favor domestic destinations over international travel. Overall expected spending on airfare/trains for personal travel fell again in April.
Consumer views of Family’s Current Financial Situation and Family’s Future Financial Situation were both less optimistic in April, while the share of consumers who said a recession in the United States over the next 12 months is very likely rose again, while those saying somewhat likely or not likely fell.
Consumers’ average and median 12-month inflation expectations lowered but remained elevated. The percentage of consumers saying interest rates over the next 12 months will rise advanced to almost 50%. Expectations for higher stock prices a year from now gained.
The take on current business conditions was slightly less upbeat in April, as 22% of consumers said business conditions were good, up from 21.7% in March, and 17.9% said business conditions were bad, up from 15.8%. Consumer perception of the labor market improved moderately in April. At the same time, 27.3% of consumers said jobs were plentiful, virtually unchanged from 27.4% in March, while 19.8% of consumers said jobs were hard to get down from 21.3%.
When asked about their expectations six months out, consumers were slightly more downbeat about future business conditions with 18.9% anticipating that business conditions will improve, up from 18.1% in March, and 23.6% anticipating that business conditions will worsen, up from 21.4%. In the main, consumers were less negative about the labor market outlook in April as 16.1% of consumers expected more jobs to be available, up from 15.4% in March, and 26.9% anticipated fewer jobs to open up, down from 27.8%.
On net, consumer outlook for income prospects was a bit more hopeful in April. with 18.6% of consumers expecting their cash flow to increase, down from 19.2% in March, and 12.3% expecting their incomes to decline, down from 13.6%.
Consumers’ write-in responses on factors affecting the economy continued to skew towards pessimism in April, The Conference Board observed with comments about prices, oil, gas and war increasing in frequency compared to March. The organization maintained that the negative sentiments were a likely signal of consumers’ underlying worries about how the war in the Middle East would impact their finances.
“Consumer confidence edged up in April but was overall little changed, despite material concern about rising gasoline prices as the war in the Middle East prompted a surge in Brent crude oil prices,” said Dana Peterson, Conference Board Chief Economist, “Consumer appraisals of current and expected business conditions declined moderately compared to last month. This was offset by modest improvements in consumers’ perceptions of the labor market, both current and expected, as well as income expectations, which were slightly more optimistic in April.”
