April Consumer Confidence Stumbles

It seems that consumer confidence is as fickle as the housing market.

The Conference Board, New York, said its Consumer Confidence Index fell moderately in April, continuing a string of volatility. The Index fell to 94.2, down from 96.1 in March. The Present Situation Index increased from 114.9 to 116.4, while the Expectations Index decreased from 83.6 to 79.3 in April.

“Consumers’ assessment of current conditions improved, suggesting no slowing in economic growth,” said Lynn Franco, director of economic indicators with The Conference Board. “However, their expectations regarding the short-term have moderated, suggesting they do not foresee any pickup in momentum.”

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said the dip in expectations gave back all of the gain from the prior month.

“Consumers still maintain a cautious view on the economy, reflecting sluggish income growth,” Vitner said. “While the stock market held up well in March and April the gains appear to have assuaged fears that economic conditions were set to worsen rather than raised expectations that the economy was headed for stronger gains.”

The report said consumers’ appraisal of current conditions improved somewhat in April. Those saying business conditions are “good” decreased from 24.9 percent to 23.2 percent. However, those saying business conditions are “bad” also declined, from 19.2 percent to 18.1 percent. Consumers’ appraisal of the labor market was also mixed. Those claiming jobs are “plentiful” decreased from 25.4 percent to 24.1 percent, however those claiming jobs are “hard to get” also declined from 25.2 percent to 22.7 percent.

Consumers were less optimistic about the short-term outlook in April than last month. The percentage of consumers expecting business conditions to improve over the next six months decreased from 14.7 percent to 13.4 percent, while those expecting business conditions to worsen rose to 11.0 percent from 9.5 percent.

Consumers’ outlook for the labor market was also less favorable. Those anticipating more jobs in the months ahead decreased slightly from 13.0 percent to 12.2 percent, while those anticipating fewer jobs edged up from 16.3 percent to 17.2 percent. The proportion of consumers expecting their incomes to increase declined from 16.9 percent to 15.9 percent; however, the proportion expecting a reduction in income also declined, from 12.3 percent to 11.2 percent.

“Consumers are maintaining a cautious view about future economic conditions,” Vitner said. “The current level of consumer confidence is consistent with modest economic growth, but the question about whether to believe the widely expected weaker GDP figures or recent stronger job figures is as muddled as ever. We believe that both series are reasonably correct and that good jobs are simply hard to find right now.”