U.S. consumer sentiment rose nearly 11 percent early this month but remains historically low, according to the University of Michigan Surveys of Consumers monthly report.
The gain was especially strong in the Expectations Index, which increased 18 percent from March, including a 29.4 percent jump in the year-ahead economic outlook and a 17.2 percent jump in personal financial expectations. The report follows March’s Surveys of Consumers study, which revealed that sentiment had fallen nearly 30 points to 59.7 over the last 12 months due to continued inflation, higher fuel prices and Russia’s recent invasion of Ukraine. April’s Index of Consumer Sentiment was measured at 65.7.
Chief Economist Richard Curtin said the index “offers only tentative evidence of small gains in sentiment, which is still too close to recession lows to be reassuring,” with ongoing threats including the impact of Russia’s war in Ukraine and the potential impact of any new Covid-19 variants.
Wage expectations for customers younger than 45 years old grew to 5.3 percent in April, the largest jump in more than three decades. Those expectations come as inflation, measured at 8.5 percent by the Consumer Price Index last month, reduces worker take-home pay. “Consumers still anticipate that the national unemployment rate will inch downward, acting to improve consumers’ outlook for the national economy,” Curtin wrote.
Consumers only expect a minimal gas price increase over the coming year, reversing March’s expected surge of nearly 50 cents. “Retail gas prices have fallen since the March peak, and that fact was immediately recognized by consumers,” Curtin wrote. “The shift in gas price expectations may be partly due to [President Joe Biden’s] announced release of strategic oil reserves and the relaxing of some seasonal EPA rules.”