Consumer Confidence

The final UoM confidence index for April was 97 vs the 1^st print of 98 and vs the estimate of 98. It’s essentially flat with the 96.9 seen in March and compares favorably with the 87.2 print in October and is just below the cycle peak of 98.5 in January. From March, Current Conditions fell .5 pt but was offset by a .5 pt rise in Expectations. One year inflation expectations held at 2.5%. Higher income expectations gave back 1 pt of the 2 pt gain in the initial report. Those expecting less unemployment was flat with March. With respect to the major household spending decisions, those that said it’s a good time to buy a vehicle held its preliminary 5 pt rise from March. Those wanting to buy a home gave up 2 pts of the 7 pt rise vs March. Those that plan on buying a major household item fell 4 pts from the 1^st April print but is still up 4 pts from March. This was a positive read from UoM: “An improved financial situation was reported by 50% of all households in both the March and April surveys—the last time a higher figure was recorded was more than fifteen years ago. Consumers cited net income and wealth gains as the main reasons for their improved finances.”

Bottom line, consumer confidence remains near the best in this recovery but the bifurcation remains. UoM said “There remains widespread agreement among consumers on their very positive assessments of the current state of the economy as well as widespread disagreement on future economic prospects based on partisanship. Although the partisan divide has slightly narrowed in recent months, it still reflects a very pessimistic economic outlook among Democrats and a very optimistic outlook among Republicans.” As I’ve said many times, don’t use consumer confidence data as a tool in predicting future consumer behavior. Data such as this is just a snapshot in time. I’ve included a chart going back to 1998 and you can see the times that its peaked and troughed: