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Economy in Brief

U.S. Consumer Confidence Craters in April as Coronavirus Spreads
by Tom Moeller  April 28, 2020

• Appraisal of current conditions plunges but expectations rise.

• Buying plans falter.

• All age groups exhibit less confidence.

The Conference Board's Index of Consumer Confidence declined 26.9% (-32.7% y/y) during April to a level of 86.9 following a 10.4% March drop, revised from -9.5%. It was the lowest level of confidence since June 2014. A decline to an index level of 90.0 had been expected in the Action Economics Forecast Survey. Over the last 20 years, there has been a 67% correlation between the level of confidence and the y/y change in real consumer spending.

The index of current conditions weakened 54.2% (-54.8% y/y) to the lowest level since December 2013. A greatly lessened 20.8% of respondents felt that business conditions were good, down from 39.2% in March. Jobs were viewed as hard to get by 33.6% of respondents, up from 13.8% in March.

Despite the decline in current conditions, the index of expected business conditions in six months rose 8.1%, after falling 19.7% in March. Forty percent felt that would business conditions would improve, up from 18.7% in March. Forty- one percent of respondents felt that there would be more jobs in six months, up from 16.9% last month, but a greatly lessened 16.7% felt that income would increase.

Expectations for the inflation rate in twelve months surged to 5.3% this month from 4.5% in March. It was the highest level since October 2014. Interest rates were expected to move higher in 12 months by 36.1% of respondents, half the high in 2018. Just 1.5% planned to buy a new home, but that remained up from 0.9% in December. A greatly lessened 2.8% planned to buy a new car while 45.1% planned to buy a major appliance, down from 55.0% in February.

By age group, the index of confidence amongst those under age 35 eroded 26.5% (-35.0% y/y). For respondents aged 35-54, confidence fell 25.2% (-33.5% y/y) and for those over age 55, it weakened 29.1% (-31.8% y/y).

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

Conference Board (SA, % Chg.) Apr Mar Feb Apr Y/Y 2019 2018 2017
Consumer Confidence Index -26.9 -10.4 1.7 -32.7 -1.4 8.0 20.7
   Present Situation -54.2 -1.5 -2.6 -54.8 3.1 13.8 20.3
   Expectations 8.1 -19.7 6.6 -8.7 -6.0 2.6 21.1
Consumer Confidence By Age Group
   Under 35 Years -26.5 -6.7 3.7 -35.0 0.3 2.7 6.4
   Aged 35-54 Years -25.2 -11.0 6.4 -33.5 -1.1 7.0 16.4
   Over 55 Years -29.1 -10.8 -3.5 -31.8 -1.9 11.8 33.5
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