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Consumer Sentiment Improves to Nine-Month High

ups-and-downs-graphA late-month measure of consumer confidence shows sentiment rebounded to a near post-recession high in April, though questions remain as to whether or not that optimism will hold out.

The latest Index of Consumer Sentiment, released jointly by Thomson Reuters and the University of Michigan, came to a final reading of 84.1 for April, resting one index point below its post-recession peak recorded last July. The improvement reflects a moderate jump from a preliminary reading of 82.6 reported earlier in the month.

According to UMich’s Surveys of Consumers group, the pickup was due to a more positive assessment of consumers’ current financial situation as well as “renewed optimism about the outlook for the national economy during the year ahead.”

However, Surveys of Consumers’ chief economist, Richard Curtin, expressed some doubt about future index movements: “The most important issue is whether consumers will show greater resistance to the backslides that have repeatedly occurred in the past few years.

“Resilience among consumers is dependent on positive long term economic expectations. While near term expectations have improved substantially, longer term expectations for personal finances as well as the overall economy have remained unchanged from a year ago,” he continued.

The two component indexes contributing to the headline number both improved significantly in April: The index gauging current conditions for consumers moved up to 98.7, a monthly increase of 3.1 percent, while the index of consumer expectations climbed 6.7 percent to 74.7.

Overall, Surveys of Consumers found Americans were slightly more optimistic about future labor market conditions, though only minor improvements are expected as far as unemployment goes.

Meanwhile, the group says, “[t]he main attraction of home buying conditions has shifted in the past few months toward a greater reliance on low mortgage rates and less emphasis on low prices. This has made the continued expansion of home purchases more responsive to changes in the availability of mortgage credit to potential home buyers.”

Surveys of Consumers’ sentiment index precedes the Conference Board’s Consumer Confidence Index, scheduled for release Tuesday. Economists surveyed by Bloomberg expect that measure to improve to a reading of 83.


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