The preliminary UoM April consumer confidence index rose 1.1 pts to 98 which was 1.5 pts above the estimate. This compares with the September level of 91.2, October at 87.2 and the peak post election of 98.5 in January. Almost the entire m/o/m gain was in the Current Conditions component which rose 2 pts to the highest since November 2000. Consumer Expectations were up by .4 pts to 86.9. It peaked back on January at 90.3. The Net Income component rose 1 pt to 19 vs 10 in October and 21 in December. Those expecting lower unemployment over the next yr fell 1 pt after rising by 2 last month. With respect to overall personal finances for all households, that rose to the best since 2000. Business expectations were higher. On the question “Country will have continuous good times over the next 12 months” was down 5 pts to 111 vs 109 in November and 91 in October. It peaked at 121 in January. Those that think the “Government is doing a good job fighting inflation and unemployment” is back to where it was before the election.
Of note, we did see an improvement in buying intentions of big ticket items. Those planning on buying a car/truck rose 2 pts to the highest since May (maybe all the incentives are whetting appetites). Those who said it’s a good time to buy a home rose 3 pts to the most since August 2016. Those that said it’s a good time to buy a major household item was higher by 5 pts to the best since 2005. One year inflation expectations held at 2.5%.
The differences between parties was still apparent but a bit less so. UoM said “the small shrinkage after 5 months indicates that the partisan divide will persist for some time, promoting a shift from a market to a political economy.”
I just have to laugh when I see these politically driven numbers: “Favorable news about economic policies and employment was heard by 69% of Republicans but only by 28% of Democrats, whereas unfavorable news on those same topics was reported by 20% of Republicans and 49% of Democrats. It should be no surprise given the sharply different perceptions that the national economy was expected to improve by just
18% of Democrats compared with 69% of Republicans. You may find it hard to believe that this represents a narrowing of the partisan gap, but last month’s difference was 13% versus 81%!”
Bottom line, it’s good to see consumer confidence holding at high levels but you should never rely on these indices to tell you what’s going to happen in the future. Certainly the optimistic levels seen in 2000 wasn’t very helpful just as the miserable attitudes in late 2008 and early 2009 told us nothing about the recovery.
Chart on consumer confidence: