Consumers were slightly less optimistic in April, according to the Survey of Consumers from the University of Michigan and Thomson Reuters. The consumer sentiment index fell from 76.2 in March to 75.7 in April, ending seven consecutive months of improvements. Still, it is important to note that consumers remain more positive than they were last August, when the index fell to 55.7.
The decline in April’s index was largely the result of reduced perceptions about the current economic environment, with the index for present conditions declining from 86.0 to 80.6. It is likely that higher gasoline prices and weaker job gains in March weighed on respondents minds. At the same time though, consumer opinions about future economic growth rose, with the expectations components up from 69.8 to 72.5. The improving longer-term trend has been driven mostly by more favorable assessments about future growth.
Inflationary expectations have improved since March, when energy costs jumped due to higher gasoline prices. Prices are now expected to rise by 3.4 percent over the course of the next year, down from the 3.9 percent gain predicted last month.
Chad Moutray is chief economist, National Association of Manufacturers.