United States: Consumer confidence makes a surprise turnaround in April
April 24, 2018
Consumer confidence recovered in April, rebounding from March’s decline to the second highest print since November 2000. The Conference Board’s monthly consumer confidence index rose to 128.7 in April from a downwardly revised 127.0 in March (previously reported: 127.7), surprising market analysts who had expected the index to fall to 126.1. The index remains well above the 100-point threshold that separates consumer optimism from pessimism.
The higher headline figure came on the back of consumers’ more optimistic assessment of both their current conditions and their near-term outlook. Households were more upbeat about their short-term income expectations, with the number of consumers who expected their incomes to decline in the short term hitting the lowest level since December 2000. Likewise, consumers’ view on the near-term outlook for businesses also improved markedly in April from March. Consumer spending plans also firmed up in April as a bigger share of respondents expressed plans to purchase major appliances, homes and autos in the next six months. A record number of respondents reported they planned to purchase a home.
On a weaker note, the labor differential—the difference between the percentage of respondents who state that jobs are plentiful and those who say that jobs are hard to get—narrowed to a three-month low of 22.9 in April, down from 25.0 in March. However, consumers had a more positive evaluation of labor market prospects, with a higher proportion expecting more jobs in the upcoming months. Consumers’ expectations of future income also improved slightly in April.
April’s rebound points to a strengthening U.S. economy following a soft patch in the first quarter. Consumers’ willingness to purchase big-ticket items, together with other recent economic data such as the pick-up in home sales in March and a tick up in wage growth in March, suggests the economy will in the second quarter be able to shake off any lag in consumer spending reported in the first quarter.
United States Private Consumption Forecast
FocusEconomics Consensus Forecast panelists expect private consumption to grow 2.6% in 2018, which is down 0.1 percentage points from last month’s forecast. For 2019, the panel sees private consumption increasing 2.3%.
Author: Lindsey Ice, Economist