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Economy in Brief

U.S. Consumer Confidence Backpedals
by Tom Moeller  April 25, 2017

The Conference Board Consumer Confidence Index fell 3.7% during April (+27.0% y/y) to 120.3 following a little-revised 7.6% March gain. Despite the decline, the index remained near the highest level since December 2000. The Action Economics Forecast Survey looked for a decline to 123.0. During the past thirty years, there has been a 70% correlation between the level of consumer confidence and the y/y change in real PCE.

The decline in confidence reflected a 5.0% fall (+33.9% y/y) in the expectations reading to 106.7. The present situation index eased 2.3% (+20.1% y/y) to 140.6.

The percentage of respondents indicating that business conditions are "good" slipped to 30.2%, while those saying business conditions are "bad" ticked up to 13.8%. Respondents stating that jobs are "plentiful" eased to 30.8%, still near the highest percentage since 2001, while those claiming jobs are "hard to get" held fairly steady at 19.1%. These changes in views on labor market conditions led to an easier labor market differential (a reliable indicator of the unemployment rate) of 11.7 percentage points, but that remained near the 2001 high.

The percentage expecting business conditions to improve over the next six months fell back from its March high to 24.8%. For labor markets, the percentage expecting more jobs in the months ahead slipped to 23.0%, still a cycle high. The percentage of consumers expecting their incomes to strengthen eased to 19.3%, and reversed the March rise.

The expected rate of inflation in twelve months held steady at 4.7%. The percentage expecting higher interest rates over the next twelve months eased to 71.3%.

Confidence amongst individuals over age 55 fell moderately. Confidence amongst individuals aged 35-to-54 also declined, but confidence amongst respondents under age 35 remained firm.

The Consumer Confidence data is available in Haver's CBDB database. The total indexes appear in USECON, and the market expectations are in AS1REPNA

Conference Board (SA, 1985=100) Apr Mar Feb Y/Y % 2016 2015 2014
Consumer Confidence Index 120.3 124.9 116.1 27.0 99.8 98.0 86.9
  Present Situation 140.6 143.9 134.4 20.1 120.6 111.7 87.4
  Expectations 106.7 112.3 103.9 33.9 86.1 88.8 86.6
Consumer Confidence By Age Group
  Under 35 Years 135.4 135.7 120.6 11.6 122.4 116.0 106.6
  Aged 35-54 Years 122.0 130.0 118.0 23.1 106.2 103.9 92.4
  Over 55 Years 111.0 115.4 109.5 35.7 84.6 84.1 73.8
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