Will US Consumer Confidence Rise in April?

Conference Board’s consumer expected to recover after declining in March

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The Conference Board’s consumer confidence report will be coming out later today during the NY trading session. The median estimates point to consumer confidence picking up following the decline in March.

The rebound in consumer confidence comes amid recent economic data showing a resurgence in the US economy. Various measures of the economy were seen reigniting. This put to rest concerns that the US economy could be slowing.

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Economic indicators such as rising retail sales, better than expected GDP figures and the weekly jobless claims at historical lows are just some of the reports that underline the rising confidence in consumers.

It was evident from the fact that the preliminary GDP estimates for the first quarter beat estimates by a strong margin. The US economy was advancing at a pace of 3.2% in the three months ending March.

The GDP data beat conservative estimates of a 2.2% – 2.5% increase. The weak expectations came amid a shaky start to the year. And the aggressive Fed’s rate hikes were just one of the reasons why. However, the economy began to rebound after the Fed pledged to leave rates unchanged at the March FOMC meeting.

Consumer Confidence Declines in March

The Conference Board’s consumer confidence survey for March saw the index declining during the month following a strong increase in February. The index stood at 124.1 in March, down from February’s print of 131.4.

Conference Board Consumer Confidence Index
Conference Board Consumer Confidence Index Report, March 2019

The consumer confidence was down by 7.3 points. Overall, the data was somewhat mixed. The employment trends index fell by 0.58% while the leading economic index grew 0.4 percentage points.

The present situation index which is built on the current assessment from consumers including labor market and current business fell to 160.6. In February, this measure of consumer confidence stood at 172.8.

The declines in the run-up to the March consumer confidence report were as a result of a number of factors. It was mainly due to the uncertainty of the economic outlook. The partial government shutdown into January this year also affected the consumer sentiment.

Consumer Survey Trends in April

The outlook for the April data from Conference Board is, however, one that could see a rebound. This comes as various other measures of consumer surveys show that optimism is back.

Here’s a brief rundown of the various consumer survey trends.

  • The IBD/TIPP economic optimism index fell slightly from 55.7 in March to 54.2 in April. Although this was a decline, the reading above 50 indicates a positive outlook for the economy. The IBD/TIPP economic optimism report is a strong measure of confidence in the economy. It has a track record of being a leading indicator comparing to all other surveys.
  • The UoM consumer sentiment index for April fell to 97.2 in April. This was slightly better compared to the preliminary data which saw the index falling to 96.9. In March, the UoM consumer sentiment index was at 98.4. But the gauge of the current index was weaker than the initial reports.

The surveys for April were done until April 22nd. In a separate report released by the Conference Board, the global consumer sentiment index was down by one point. In the first quarter of the year, global consumer sentiment fell to 106 in April.

Outlook for the April Consumer Confidence Report

The Conference Board noted that the overall outlook was positive. At the same time, consumers are said to be cautious about spending. This was primarily due to concerns of a possible slowdown in the economy.

For North America, which also includes Canada, the consumer confidence index improved to 118. The report showed that the gains came mostly from Canada. Consumer confidence remained the same for the United States.

The quarterly global consumer confidence report came out on April 16th, making it somewhat out of date with the current conditions. Given the latest reports such as the GDP, it is likely that confidence could rebound. We should note that even if the consumer confidence declines, it is still at historically high levels.

As a result, the market reaction would be muted for the most part to the CB’s consumer confidence report.

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