Consumer confidence readings taken this month indicated mixed sentiments amid increasing interest rates and recessionary fears.
The University of Michigan’s index for consumer sentiment increased 2.4 percent from March to 63.5, a 3 percent decrease from a year ago but 27 percent higher than the record low last June. “Rising sentiment for lower-income consumers was offset by declines among those with higher incomes,” stated Surveys of Consumers Director Joanne Hsu. “While consumers have noted the easing of inflation among durable goods and cars, they still expect high inflation to persist, at least in the short run.”
Business research nonprofit The Conference Board’s Consumer Confidence Index fell to 101.3 this month from 104 in March. In the survey taken from April 3 to April 19, the organization’s index tracking consumers’ assessment of current business and labor market conditions increased to 151.1 from 148.9 in March. Consumers’ short-term outlooks for income, business and labor market conditions fell six points to 68, indicating that consumers expect a recession to strike in the next year.
“While consumers’ relatively favorable assessment of the current business environment improved somewhat in April, their expectations fell and remain below the level which often signals a recession looming in the short-term,” noted Ataman Ozyildirim, senior director of economics at The Conference Board. “Consumers became more pessimistic about the outlook for both business conditions and labor markets. Compared to last month, fewer households expect business conditions to improve and more expect worsening of conditions in the next six months.”
The University of Michigan’s index for current economic conditions increased 3.5 percent to 68.6, and the index for consumer expectations increased by nearly 2 percent to 60.3.
Both surveys revealed consumer wariness over high inflation. In the University of Michigan survey, year-ahead inflation expectations increased to 4.6 percent this month from 3.6 percent in March. Long-term inflation expectations were lower at 2.9 percent.
In The Conference Board survey, consumer inflation expectations over the next 12 months remained at 6.2 percent, down from the 7.9 percent reached last year. Still, consumer pessimism continued. “Purchasing plans for homes, autos, appliances and vacations all pulled back in April, a signal that consumers may be economizing amid growing pessimism,” the organization stated.