The Conference Board's Consumer Confidence Index increased in April to 92.9, up 4.4 points from the revised 88.5 in March. This was above economists' expectations of 90.0. The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households.
Confidence increased across both portions of the Conference Board index. The Present Conditions index rose 6.2 points to 90.6 in April. This index measures how consumers perceive the current state of the economy.
The Expectations portion of the index, a measure of future economic activity, increased to 94.5 in April from 91.3 in March.
The University of Michigan's Consumer Sentiment Index, a comparable index, fell slightly in April, dropping to 94.2 from 95.8 in March. Each of the component indices declined. The Present Conditions index was 1.8 points lower in April at 105.0, while the Expectations portion fell to 87.3 from 88.8 in March. Although the decline in this index seems unusual given other positive economic reports in April, all portions of the index were revised up from the preliminary mid-month estimates. This indicates that confidence improved toward the end of April, which makes it more consistent with the Conference Board index.
There are several factors supporting consumer confidence. Confidence appears strengthened by recent improvements in labor market reports. Despite recent increases, interest rates also remain low and consumers are still receiving income tax refunds that may boost their ability to spend.
However, there are still factors that weigh on consumer confidence. Consumers have concerns about record-high gasoline prices, large amounts of debt and the fluctuating stock market. Consumers also have little pent-up demand, which can restrict spending. Confidence also suffers from international concerns with recent terrorist attacks overseas.
Consumer confidence is expected to gradually rise over time as the labor market strengthens and overall recovery continues, though some fluctuations are bound to occur. Since consumer spending accounts for two-thirds of the U.S. economy, consumer confidence is a closely watched economic indicator.
Sources: www.conference-board.com
www.economy.com
