As the conflict with Iran has loomed over the heads of consumers and over the economy, the two-week ceasefire in April contributed to some relief in consumer views, according to the latest data from The Conference Board.
The Consumer Confidence Index® saw a 0.6 point increase to 92.8 in April (baseline of 100 is based on conditions from 1985), up from 92.2 in March (revised from 91.8).
Notably, this month’s survey was conducted from April 1-22, which included the two-week ceasefire with Iran that began on April 8 but appears shaky amid blockades and stalled negotiations.
Similarly, consumer sentiment from the University of Michigan, while observing a monthly decrease and remaining troubled overall, also saw a little relief from the two-week ceasefire.
Despite the slight increase, Dana M. Peterson—chief economist for The Conference Board—said that confidence was “overall little changed, despite material concern about rising gasoline prices as the war in the Middle East prompted a surge in Brent crude oil prices.”
Write-in responses were again leaning toward pessimism in April, as comments about prices, oil and gas, and war grew more frequent—a “likely signal of consumers’ underlying worries about how the war in the Middle East will impact their pockets.”
Demographically, the younger generations (millennials and Gen Z, those under 35) remain more positive than the older generations (those 35 and over). Income-wise, most income groups expressed less optimism. Across political affiliations, Republicans continue to be more optimistic, while Democrats saw a slight improvement and Independents saw a decrease.
Looking at the Present Situation and Expectations Indices, Peterson noted that while the current and expected appraisals of business conditions saw moderate declines, this was offset by “modest improvements in consumers’ perceptions of the labor market, both current and expected, as well as income expectations, which were slightly more optimistic in April.”
The Present Situation Index fell 0.3 points to 123.8 in April. In terms of business conditions, 22% of consumers said business conditions were “good” (up from 21.7% in March), while 17.9% said conditions were “bad” (up from 15.8%). Labor market-wise, 27.3% of consumers said jobs were “plentiful” (mostly unchanged from 27.4% in March), while 19.8% of consumers said jobs were “hard to get” (down from 21.3%).
The Expectations Index, on the other hand, grew by 1.2 points to 72.2 in April. Business-wise, 18.9% of consumers expected business conditions to improve in the next six months (up from 18.1% in March), while 23.6% expected conditions to worsen (up from 21.4%). In terms of the labor market, 16.1% of consumers expect more jobs to be available in the next six months (up from 15.4% in March), while 26.9% expect fewer jobs (down from 27.8%). As for incomes, 18.6% of consumers expect increases to their incomes (down from 19.2% in March), while 12.3% expect declines (down from 13.6%).
Looking at home-buying expectations, there was a “mild recovery” in the six-month rolling basis for existing and new home purchases, and the report notes consumers continue to prefer existing homes.
As for the year ahead, the average and median 12-month inflation expectations from consumers saw a decrease, but remain elevated. Consumers are still mostly expecting higher interest rates, up to nearly 50%. High stock prices are also expected, seeing an increase.
