BOSTON – Consumers appear to be regaining their confidence in the economy, which bodes well for future purchases of anything from homes to appliances.
The Conference Board Consumer Confidence Index rose sharply again in April, following a substantial gain in March. The Index now stands at 121.7, up from 109.0 in last month. It’s returned to levels last seen before the pandemic fully hit.
The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – soared from 110.1 to 139.6. The Expectations Index – based on consumers’ short-term future outlook for income, business and labor market conditions – rose moderately, from 108.3 last month to 109.8 in April.
“Consumer confidence has rebounded sharply over the last two months and is now at its highest level since February 2020,” says Lynn Franco, senior director of economic indicators at The Conference Board. “Consumers’ assessment of current conditions improved significantly in April, suggesting the economic recovery strengthened further in early Q2.”
Future assessments, which improved only a little, still rose.
“Consumers’ optimism about the short-term outlook held steady this month,” Franco adds. They were “more upbeat about their income prospects, perhaps due to the improving job market and the recent round of stimulus checks.”
Expectations for inflation in the short-term held steady, but Franco says they “remain elevated.” However, the economist also noted that “vacation intentions” had a “healthy increase, likely boosted by the accelerating vaccine rollout and further loosening of pandemic restrictions.”
Current conditions: The percentage of consumers claiming business conditions are “good” increased from 18.3% to 23.3%, while the proportion claiming business conditions are “bad” fell from 30.1% to 24.8%.
Assessment of the labor market also improved. The percentage of consumers saying jobs are “plentiful” increased from 26.5% to 37.9%, while those claiming jobs are “hard to get” declined from 18.5% to 13.2%.
Future conditions: The percentage of consumers expecting business conditions to improve over the next six months rose marginally, from 40.3% to 40.5%, while the proportion expecting business conditions to worsen stood relatively unchanged at 11.9%.
Outlooks regarding the job market were slightly less upbeat. The proportion expecting more jobs in the months ahead fell from 35.9% to 34.5%, while those anticipating fewer jobs rose from 14.4% to 15.5%.
Regarding short-term income prospects, 17.9% of consumers expect their incomes to increase in the next six months, up from 15.4% in March. Those expecting their incomes to decrease fell to 10.9%, down from 12.6%.
The monthly Consumer Confidence Survey is based on a probability-design random sample and conducted for The Conference Board by Nielsen. The cutoff date for the preliminary results was April 16.
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