Consumer confidence surged in April beyond expectations. The Conference Board's Consumer Confidence Index was 81.0, up nearly 20 points from the revised 61.4 in March. This is the largest single month increase since March 1991. The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households.
Confidence rose across both portions of the Conference Board index. Present Conditions, a factor in the total composite index, increased to 75.3 from 61.4 in March. This index measures how consumers perceive the current state of the economy.
The Expectations portion of the index was largely responsible for the overall increase in the index. This measure of future economic activity was 84.8, up 23.4 points from March.
The University of Michigan's Consumer Sentiment Index, a comparable index, also increased in April to 86.0 from 77.6 in March. Both component indices gained. The Present Conditions portion was up 6.4 points to 96.4. The Expectations Index improved by nearly 10 points to 79.3 from 69.3 in March.
Despite the considerable jump in April, confidence remains relatively low. The Conference Board index is below the level of last November. Consumers remain concerned about the future of the economy, particularly in regards to labor markets, security issues and high debt levels.
However, some areas still provide support for further consumer spending. Income and wages continue to grow modestly, interest rates remain low and disposable income may be boosted by the passage of an effective economic stimulus package. Lower energy prices may also encourage spending.
Since consumer spending accounts for two-thirds of the U.S. economy, consumer confidence will remain a closely watched and critical component for economic recovery.
Sources: www.cnnfn.com
www.conference-board.com
www.economy.com
