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Inflation Not Taking Huge Toll on Consumer Confidence, Yet
The Consumer Confidence Index dipped in April, but U.S. consumers remain “cautiously optimistic” overall, The Conference Board said.
Consumer confidence slipped in April but shoppers still seem intent on making big-ticket purchases, like cars and appliances, in the coming months, The Conference Board said this week.
New York—Consumer confidence remains relatively high despite inflation and the ongoing war in Ukraine, The Conference Board said.
The Conference Board released its monthly Consumer Confidence Index on Tuesday, which is designed to be a barometer of health of U.S. economy from the consumers’ viewpoint.
The Consumer Confidence Index fell in April, but only slightly. It now stands at 107.3, down from 107.6 in March. (The baseline for the index is 100, so anything above 100 is indicative of a more optimistic consumer and an expanding economy.)
The Present Situation Index, which measures consumers’ current assessment of business and labor market conditions, also fell—declining to 152.6 from 153.8 last month—but remains high.
This is an indication the U.S. economy continued to grow in Q2, Lynn Franco, senior director of economic indicators at The Conference Board, said in a press release on the results.
The Expectations Index, which measures consumers’ short-term outlook on income, business and labor market conditions, remains “weak,” Franco said, but rose to 77.2 in April despite high prices—especially for gas—and the ongoing war in Ukraine.
Consumers’ intentions around spending money on vacations “cooled,” while plans to purchase big-ticket items, like automobiles and appliances, increased. However, interest in purchasing big-ticket items is not as strong as it was in January because of rising interest rates, Franco told National Jeweler in an interview.
There also is expected to be some softening in consumer spending because of inflation, particularly among less affluent consumers, who will see more of their budgets going toward necessities like gas and groceries.
“It’s sort of the tale of two consumers,” Franco said, “The less affluent are more likely to be impacted as opposed to the more affluent.”
Also expected to factor in is what Franco described as “the wildcard”—the geopolitical situation, which includes the war in Ukraine as well as resurgence of COVID-19 in China and any resulting supply chain disruptions.
Looking more closely at the Present Situation Index shows that consumers had a mixed view of April business conditions.
More consumers said business conditions were “good” (21 percent, up from 20 percent), but more also said conditions were “bad” (22 percent, up from 21 percent)—again, a “tale of two consumers.”
Their view of the labor market deteriorated, with fewer consumers describing jobs as “plentiful” (55 percent vs. 57 percent) and 11 percent of consumers saying jobs were hard to get, up from 10 percent in March.
The Expectations Index, which gauges consumers’ outlooks for the next six months, showed a similarly mixed view of business conditions and a more pessimistic view of the labor market but a more upbeat feeling about their financial prospects.
In April, 17 percent of consumers surveyed said they expect their incomes to increase in the next six months, up from 15 percent in March.
Fourteen percent said they expect their incomes to decrease, unchanged from March.
The Conference Board publishes The Consumer Confidence Index on the last Tuesday of every month.
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