U.S. consumer confidence has decreased for the third consecutive month, dropping to 97 in April from 103.1 in March. The index, compiled by the Conference Board, measures Americans’ assessment of current economic conditions as well as their outlook for the next six months. The decline in confidence is largely due to concerns about high prices and interest rates, with the index measuring short-term expectations for income, business, and the job market hitting a low not seen since July of 2022.
Responses to the survey showed that Americans are particularly worried about the rising prices of food and gas, leading to a decrease in confidence among consumers of all age and income groups. The only exception was those earning annual salaries between $25,000 and $49,999. Additionally, the number of respondents planning to make big purchases, such as a home or big-ticket appliance, has also declined, along with those intending to take a vacation. Despite these concerns, most economic indicators still point to a strong U.S. economy by historical standards.
While the U.S. economy slowed in the first quarter to a 1.6% annual pace due to high interest rates, consumers continued to spend at a solid pace. This indicates that consumers remain the main driver of economic growth, even amidst challenging economic conditions. Recent reports from the Commerce Department showed that GDP decelerated in the first quarter, but retail sales rose beyond economists’ expectations in March. The labor market also continues to perform well, with employers adding 303,000 jobs in March and the unemployment rate dropping to 3.8%.
Despite the recent downturn in consumer confidence, the U.S. economy remains resilient with strong indicators such as solid retail sales and job growth. Consumers have shown resilience in their spending habits despite inflationary pressures, indicating confidence in the overall economy. The upcoming April jobs report is expected to show further job growth, with economists forecasting an addition of 230,000 jobs. These positive economic indicators suggest that while consumer confidence may have declined, the overall economic outlook for the U.S. remains favorable.
