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First Cut: Consumer Confidence Index rebounds in April as labor market buoys optimism

The Conference Board’s Consumer Confidence Index rose to 129.2 in April after 124.2 in March (previously 124.1). Perceptions of present conditions improved to 168.3 after 163.0 in the prior month, and six month expectations bounced back to 103.0 after 98.3 in March. Of late, consumers’ optimism has been buffeted by exogenous events like the 35-day partial federal government shutdown, concerns about a slowdown in economic activity, and a contentious news cycle associated with political divisions in the US. However, short-term impacts do not change the underlying confidence that has been buoyed by a strong labor market for the present, and signs of continued moderate expansion that should support growth for the near future.

All five components of the index were higher in April compared to the four down in March. Consumers find present employment conditions quite positive and see business conditions as contributing to growth. Six month expectations for personal income and employment were up somewhat, but it was the strong outlook for business activity that put the final seal on overall robust confidence.

In the present, consumers find jobs are plentiful. The subindex rose to 46.8 in April, its highest since 46.8 in November 2018. In fact, the level has been broadly above readings for most of 2018 which indicates that consumers find the labor market quite favorable. Jobs hard-to-get dipped to 13.3 in April from 13.8 in March, not much changed over the medium term.

The robust levels of consumer confidence may not in and of itself lead to more consumer spending, but at the present time it is accompanied by rising incomes and hopes of that trend continuing. In spite of higher costs for some nondiscretionary spending like gasoline, budgets are less tight and consumers can contemplate making discretionary purchases with more optimism.



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