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Economy in Brief

U.S. Consumer Confidence Disappoints
by Tom Moeller  April 26, 2016

The Conference Board's Consumer Confidence Index during April declined 2.0% (-0.1% y/y) to 94.2 and reversed most of a March increase to 96.1, revised from 96.2. The latest figure compared to 95.8 in the Action Economics Forecast Survey. During the last ten years, there has been a 70% correlation between the level of confidence and the y/y change in real consumer spending.

The expectations reading declined 5.1% (-9.0% y/y) to 79.3 after a 4.6 rise. In contrast, the present situations figure rose 1.3% (10.8% y/y) to 116.4 following two months of decline.

Expectations that business conditions would be improved in six months declined sharply to the lowest level since October 2011. Expectations for more jobs also fell as did expectations that income would improve. Offsetting these declines, the appraisal of current business conditions rose to the highest level in three months. The percentage who thought that business conditions were bad fell slightly. The perception that jobs were hard to get, however, deteriorated slightly to 22.7% of respondents, the lowest level since August. The percentage who thought that jobs were plentiful also eased.

Expectations for the inflation rate held steady m/m at 4.8%, nearly the lowest level since early 2007. Higher interest rates were expected by a somewhat higher 61.5% of respondents, though that remained down sharply versus three months ago.

Plans to buy a new home rebounded following March's sharp decline, but major appliance buying plans deteriorated slightly. Intentions to buy a new car rose slightly.

By age group, confidence amongst respondents under age 35 improved to the highest point since March 2015. Confidence amongst those aged 35-54 years eased to a twelve-month low, and confidence amongst respondents over age 55 fell to roughly a five month low. Both of these latter figures remained sharply lower versus last year's highs.

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 % 2015 2014 2013
Consumer Confidence Index 94.2 96.1 94.0 -0.1 98.0 86.9 73.2
  Present Situation 116.4 114.9 115.0 10.8 111.7 87.4 67.6
  Expectations 79.3 83.6 79.9 -9.0 88.8 86.6 77.0
Consumer Confidence By Age Group
  Under 35 Years 123.9 123.6 112.1 7.6 116.0 106.6 93.1
  Aged 35-54 Years 98.7 101.4 101.2 2.6 103.9 92.4 76.8
  Over 55 Years 78.4 80.1 80.9 -2.9 84.0 73.8 61.2
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