U.S. Consumer Sentiment Unexpectedly Improves in April — University of Michigan
Consumer sentiment in the U.S. unexpectedly rose at the beginning of April as expectations for the economy and personal finances improved, but it remained at decade-low levels.
The preliminary estimate of the consumer sentiment index released Thursday by the University of Michigan stood at 65.7 in April, up from 59.4 in March and beating the 59.0 consensus forecast from economists polled by The Wall Street Journal.
April’s data mark the first improvement in confidence since December, but the index is still at its lowest level since November 2011 as the spread of the Covid-19 Omicron variant at the beginning of the year and high inflation prompted a sharp fall in sentiment from January to March.
The gain in sentiment was driven by consumers’ more upbeat views on short-term expectations. The index measuring them, which reflects the balance of respondents anticipating improved business conditions in the next six months, rose to 64.1 in April from 54.3 in March.
There was a leap of 29.4% in the year-ahead outlook for the economy and a 17.2% jump in personal financial expectations, said Richard Curtin, the survey’s chief economist.
A strong labor market bolstered wage expectations among consumers under 45 years-old to 5.3%, the largest expected gain in more than three decades, Mr. Curtin said. “Consumers still anticipate that the national unemployment rate will inch downward, acting to improve consumers’ outlook for the national economy,” he said.
The index measuring Americans’ assessment of the current economic conditions increased only slightly, to 68.1 in April from 67.2 in March.
Americans’ inflation expectations were unchanged in April compared with March. For the year-ahead, consumers expect prices to rise 5.4%, and the next five years they anticipate an increase of 3%.
April’s data offer only tentative evidence of small gains in sentiment, which is still too close to recession lows to be reassuring, Mr. Curtin said.
“There are still significant sources of economic uncertainty that could easily reverse the April gains,” he said.
The survey’s final reading will be published on April 29.
Source: Dow Jones