April Consumer Confidence Takes Another Dive
The Conference Board, New York, said its Consumer Confidence Index deteriorated further in April, following a sharp decline in March. The Index now stands at 86.9, its lowest level since 2014, down from 118.8 in March and 130.7 in February.
The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – also declined considerably, from 166.7 to 76.4. However, the Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – improved from 86.8 in March to 93.8 this month.
“Consumer confidence weakened significantly in April, driven by a severe deterioration in current conditions,” said Lynn Franco, Senior Director of Economic Indicators with The Conference Board. “The 90-point drop in the Present Situation Index, the largest on record, reflects the sharp contraction in economic activity and surge in unemployment claims brought about by the COVID-19 crisis. Consumers’ short-term expectations for the economy and labor market improved, likely prompted by the possibility that stay-at-home restrictions will loosen soon, along with a re-opening of the economy. However, consumers were less optimistic about their financial prospects and this could have repercussions for spending as the recovery takes hold. The uncertainty of the economic effects of COVID-19 will likely cause expectations to fluctuate in the months ahead.”
Tim Quinlan, Senior Economist with Wells Fargo Securities, Charlotte, N.C., said the consumer confidence report was a “knockdown, not a knockout.”
“Forward-looking measures improved; the fighter is getting up,” Quinlan said. “Even amidst this lockdown and the joblessness that comes with it, expectations actually rose.”
The report said consumers’ appraisal of current conditions declined considerably in April. Those claiming business conditions are “good” decreased from 39.2 percent to 20.8 percent, while those claiming business conditions are “bad” increased from 11.7 percent to 45.2 percent. Consumers’ assessment of the job market also eroded significantly from last month. Those saying jobs are “plentiful” decreased from 43.3 percent to 20.0 percent. Those claiming jobs are “hard to get” increased from 13.8 percent to 33.6 percent.
Consumers, however, were somewhat optimistic about the short-term outlook. The percentage of consumers expecting business conditions will improve over the next six months increased from 18.7 percent to 40.0 percent, however those expecting business conditions will worsen also increased, from 16.4 percent to 25.7 percent.
Consumers’ outlook for the labor market was mixed. The proportion expecting more jobs rose from 16.9 percent to 41.0 percent, while those anticipating fewer jobs in the months ahead also increased, from 17.6 percent to 20.8 percent. Regarding their short-term income prospects, the percentage of consumers expecting an increase declined from 20.0 percent to 16.7 percent, while the proportion expecting a decrease rose from 10.1 percent to 18.5 percent.
