Consumer Sentiment Inches Down in April
Consumer sentiment is in a rut, dragged lower by frustration over stubbornly high inflation.
The final reading of the University of Michigan’s consumer sentiment index came in at 77.2 in April, down from the preliminary reading of 77.9 and March’s 79.4 figure. Economists had been expecting the index to remain unchanged from the preliminary April reading, according to FactSet.
Inflation expectations for the year ahead were 3.2%, revised higher from the preliminary reading of 3.1% and above March’s 2.9%. Five-year inflation expectations edged up to 3% from 2.8% the prior month.
That said, the revisions are minor. Overall, April’s data suggest that sentiment has been “virtually unchanged” for three straight months, said Joanne Hsu, director of consumer surveys at the University of Michigan.
“Since January, sentiment has remained remarkably stable within a very narrow 2.5 index point range, well under the 4.8 points necessary for a statistically significant difference in readings,” she added.
That said, muted sentiment has yet to significantly weigh on consumer spending. Personal consumption expenditures rose by 0.8% in March from February to $20.2 trillion, according to the latest PCE report. This comes on the heels of last week’s hotter-than-expected retail sales report.
“Strong personal spending, following strong retail sales last week, could be the real story,” notes David Russell, global head of market strategy at TradeStation, in emailed comments to Barron’s following the PCE report. “Consumption isn’t stopping.”