May 3, 2012 (Chris Moore)
Consumer confidence was largely unchanged in April as the dismal employment gains during the month took some of the wind out of the sails in the recent run-up in consumer confidence according to the latest Surveys of Consumers by Thomson Reuters/University of Michigan.
In February and March, a record number of the consumers who were surveyed spontaneously reported hearing about recent unemployment gains, but that ended in April.
When asked specifically about what changes they expected in the unemployment rate, consumers responded that they felt future declines in the unemployment rate were less likely. Despite the setback in job growth in April, consumers still remained hopeful and overall references to employment conditions remained positive.
Consumer’s views of their own personal finances however, continued to be dismal.
For the 40th consecutive month, more consumers responded that they did not expect an increase in their income in the year ahead and only one-in-four of the households surveyed said that they expected their personal finances to improve over the next year.
Two of the three indices that make up the Index of Leading Economic Indicators still posted gains in March, but all three indicators were above last year’s levels for the second consecutive month.
The Consumer Sentiment Index climbed 0.3 percent to 76.4 in March, up from 76.2 in February and up 9.5 percent from 69.8 in March of last year.
The Consumer Expectations Index increased to a level of 72.3 in March, up 3.6 percent from a level of 69.8 in February and was up 17.4 percent from a level of 61.6 in March 2011.
The Current Conditions Index fell 3.6 percent to 82.9 in March, down from 86.0 in February but was still 0.5 percent higher than the reading of 82.5 in March of last year.
Richard Curtin, Surveys of Consumers chief economist stated, “The main challenge to building a lasting economic recovery is renewed job and income growth as well as reducing uncertainty about future federal tax and spending policies. To avoid the mid-year relapses of the prior two years, it would be best to quickly reduce uncertainty about future tax rates which are now scheduled to increase at the start of 2013. If no decision about bridging the fiscal cliff is made until after the November election, consumers are likely to become more cautious spenders, especially higher income households toward year end, and those delayed spending decisions will become more widespread the closer the election.”
Tags: Surveys of Consumers, Reuters/University of Michigan, consumers, economic slowdown, finances, recession, financial expectations