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Consumer Confidence Heads Toward Long-Term Norm

Consumer confidence reached a four-month high in April, according to the University of Michigan’s preliminary measure of consumer sentiment for the month. After taking a hit in March, the index rebounded to 82.6 in April, prompting one analytics firm to anticipate a possible return in consumer confidence to a long-term normal of 85.

The university also measures current conditions and expectations, finding upticks in both this month. The current conditions index rose from 95.7 to 97.1 in April, while the expectations survey rose from an even 70 in March to 73.3 in April.

Macroeconomics firm Capital Economics attributes the rising indices to normalizing temperatures after a harsh winter, a strengthening employment situation, and record equity prices.

“These numbers suggest that consumption growth got off to a decent start in the second quarter,” said Capital Economics economist Paul Diggle.

The S&P 500’s record high set at the end of March do doubt had something to do with the uptick in the expectations survey, according to Capital Economics.

However, “[a]dmittedly, the 3 percent drop back in equity prices since the start of the month may not have been fully incorporated into the preliminary reading of confidence and could weight on either the final reading for April, or May’s number,” Diggle suggested.

At the same time, it appears consumers were not too shaken by the $0.10 per gallon rise in gas prices.

Regardless, Diggle suggests continued job growth and pending income growth will propel consumer confidence closer to 85 over the next few months.

About Author: Krista Franks Brock

Krista Franks Brock is a professional writer and editor who has covered the mortgage banking and default servicing sectors since 2011. Previously, she served as managing editor of DS News and Southern Distinction, a regional lifestyle publication. Her work has appeared in a variety of print and online publications, including Consumers Digest, Dallas Style and Design, DS News and DSNews.com, MReport and theMReport.com. She holds degrees in journalism and art from the University of Georgia.
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