The final University of Michigan Consumer Sentiment Index for April was 71.8 (previously 71.0). The small upward revision does not meaningfully change the tone of consumers’ confidence, which has plunged 29.2 points in two months from the second highest reading of the post-recession period of 101.0 in February, just off the high of 101.4 in March 2018. The April reading is consistent with a recession.
Perceptions of current conditions fell to 74.3 in April after 103.7 in March. The sharp deterioration in the labor market has driven consumers’ confidence in the present to a its lowest since 68.7 in August 2011 when a confluence of factors made the economic recovery look threatened more likely to impede job growth.
The outlook for six months from now was at 70.1 in April after 79.7 in March, and the lowest since 70.0 in March 2014 when discouragement about the lack of heft in the economic recovery was widespread.
The measures of inflation expectations were unrevised from the preliminary estimate. The 1-year inflation measure was 2.1% for April, down a tick from 2.2% in March and holding at a low level while energy costs were on a downtrend. The 5-year inflation measure — more aligned with the Fed’s definition of the medium term for its 2% inflation goal — was 2.5% for April, a bit firmer than the 2.3% in the prior two months. At least the FOMC will have anchored consumer inflation expectations amid all the other challenges to fulfilling the dual mandate.
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