U.S. consumer confidence fell to a nine-month low in April led by a darkening outlook that augers a recession beginning in the near future, a survey showed on Tuesday. The Conference Board said its consumer confidence index fell to 101.3 – the lowest since July 2022 – from a revised 104.0 in March. The Associated Press has the story:
US Consumer Confidence Index falls in April
Consumer confidence dipped again in April as anxiety over a slowing economy and possible recession weighed on American households.
The Conference Board reported Tuesday that its consumer confidence index fell to 101.3 in April from 104 in March. It’s the third time in four months that overall U.S. consumer confidence has declined. Optimism about current economic conditions ticked up again, although consumers are less positive about the short-term future.
The index remains below 2022’s average level of 104.5. The business research group’s present situation index — which measures consumers’ assessment of current business and labor market conditions — inched up to 151.1 from 148.9 last month.
The board’s expectations index — a measure of consumers’ six-month outlook for income, business and labor conditions — fell to 68.1 this month from 74 in March. A reading under 80 often signals a recession in the coming year. The Conference Board noted that reading has come in below 80 every month but one since February of 2022.
Consumer spending, which makes up about 70% of U.S. economic activity, has remained strong despite the Federal Reserve raising interest rates nine straight times since March of last year in its effort to cool the economy and bring down persistent, four-decade high inflation.
Those rate increases can raise the cost of using credit cards or taking out a loan for a house, car or other purchases.
U.S. consumer inflation eased in March, with less expensive gas and food providing some relief to households that have struggled under the weight of surging prices. But prices still point to an elevated inflation rate far above the Fed’s 2% target and the central bank is expected to raise its main borrowing rate when it meets next month.
The board said consumer expectations about inflation remain elevated.
“Overall purchasing plans for homes, autos, appliances, and vacations all pulled back in April, a signal that consumers may be economizing amid growing pessimism,” said Ataman Ozyildirim, senior director of economics at The Conference Board.
Respondents to the Conference Board’s survey remained optimistic about the U.S. job market, which has held up well even as the Fed has ratcheted up its benchmark borrowing rate.
Last month, the government reported that employers added 236,000 jobs in March, fewer than in February and well off January’s huge gain but strong enough to keep pressure on the Federal Reserve to raise interest rates aggressively to fight inflation. The unemployment rate dipped to 3.5%, just above a recent 53-year low of 3.4%.
With an average long-term U.S. mortgage rate of 6.39%, many potential homebuyers have been pushed to the sidelines because those higher rates mean hundreds of dollars a month in extra costs.