Consumer Confidence Falls Less Than Expected in April
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The Conference Board's consumer confidence index fell to 62.3 in April's report on Tuesday, confirming declines seen earlier in the month from other measures of consumer sentiment, yet coming in slightly higher than the consensus expectation of 62.0.
The previous month's reading of 64.0 was revised upwards to 65.9.
Following a 35-year low in the previous month, the expectations category saw some bounce-back to 50.1, up from 47.9 in March, but the present situation component fell nearly 10 points to 80.7 in April from 90.6 a month earlier.
Lynn Franco, director of the Conference Board's consumer research center, said, "This continued weakening suggests that not only has the feeble level of growth in the first quarter spilled over into the second quarter, but that economic conditions may have slowed even further."
Consumers' appraisal of the job market was quite pessimistic in April, with those saying jobs were "hard to get" increasing to 27.9% from 24.5% and those claiming jobs were "plentiful" decreasing to 16.6% from 19.2%.
Inflation expectations moved up seven-tenths to 6.8%. Just one year ago, inflation expectations were 4.9%.
Respondents claiming business conditions were "bad" increased to 26.7% from 25.5% while those claiming business conditions were "good" declined to 15.3% from 15.6%.
"(N)ot only are lackluster business and job conditions eroding confidence, but rising gasoline prices are undoubtedly heightening concerns," Franco added. "Consumers' inflation expectations continue to rise and this measure now matches the all-time high reached in the aftermath of Hurricane Katrina."
In the labor market, consumers expecting fewer jobs in the months ahead increased to 32.8% from 29.3%, while those anticipating more jobs advanced to 9.0% from 8.0%. Meanwhile, the proportion of consumers expecting their incomes to increase declined to 15.1% from 16.1%.
Looking ahead, consumers' outlook for the economy, the job market and their income prospects remains quite pessimistic and little changed from last month.
Earlier in the month, a 26-year low was hit in April's consumer sentiment index from Reuters and the University of Michigan, which fell to nearly 7 points to 62.6. Similarly, the weekly consumer comfort study from the Washington Post and ABC News tumbled to -40 last Tuesday, the lowest level since July 1993.
Before the economic turmoil began, the Conference Board's consumer confidence index reached an annual high of 111.9 in June. The subprime crisis created a four-month decline to 87.0 in November before rebounding by a few points before the holidays. The index then resumed its downward trend in January, falling from 87.9 to 64.5 in the first quarter.
By Patrick McGee and edited by Cristina Markham
©CEP News Ltd. 2008
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