While economic signs remain strong and experts have a positive outlook, consumer sentiment saw a slight dip in April. The dip, however, is not any cause for concern, according to experts.
Consumer sentiment fell 1.9% in April, following a 0.5% decrease in March. These drops come after a strong start to 2024, with a 0.8% increase in February and a large leap back in January.
“Since January, sentiment has remained remarkably steady within a very narrow 2.5 index point range, well under the 5 points necessary for a statistically significant difference in readings,” said Joanne Hsu, director of the Surveys of Consumers. “Consumers perceived little change in the state of the economy since the start of the new year.”
April’s consumer sentiment reading came in at 77.9, down 1.5 points from March, but up 22.3% year-over-year. The current reading is about halfway between the historic low reached during the peak of inflation in June 2022 and pre-pandemic readings.
Year-ahead inflation expectations rose from 2.9% last month to 3.1% this month, now just above the 2.3% – 3% range seen in the two years prior to the pandemic. Long-run inflation expectations also rose, from 2.8% last month to 3% this month.
“Expectations over personal finances, business conditions, and labor markets have all been stable over the last four months. However, a slight uptick in inflation expectations in April reflects some frustration that the inflation slowdown may have stalled,” continued Hsu. “Overall, consumers are reserving judgment about the economy in light of the upcoming election, which, in the view of many consumers, could have a substantial impact on the trajectory of the economy.”
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