The figures: Following the White House’s partial halt of reciprocal tariffs, the University of Michigan reported Friday that the second of two readings of the consumer confidence survey improved to 52.2 in late April from 50.8 earlier in the month.
Even with the uptick, the sentiment reading remains the lowest in thirty-two months. Four consecutive months have shown a decline in sentiment. In December, the gauge, a crucial indicator of consumer sentiment toward the labor market and economy, was at 74.
Important information: Earlier in the month, a subindex that gauges consumer sentiment toward the economy’s current status increased from 56.5 to 59.8. Compared to 63.8 in March, that is a modest decrease.
Expectations for the following six months increased slightly, from a preliminary 47.2 to 47.3. However, it was a significant decline from 52.6 the previous month as consumers were concerned about their personal and business financial situations.
Although it is significantly lower than the previous projection of 6.7%, Americans still believe that inflation will average 6.5% in the upcoming year, which is the highest level since 1981.
Inflation is predicted to average 4.4% over the next five years, which is higher than the previous forecast of 4.1% but remains constant from the previous estimate. Since June 1991, this is the highest level.
Big picture: According to Elizabeth Renter, senior economist at NerdWallet, consumers are finding it difficult to understand conflicting messages and shifting rules.
According to James Knightley, an economist at ING, “households are concerned about the squeeze in spending power from tariff-induced price hikes, while the fear of joblessness and potential cuts to government entitlements is fueling concern about income.”
What UMich said: According to Joanne Hsu, director of the consumer survey, middle-income families’ attitude declined especially sharply this month.
“Consumers perceived risks to multiple aspects of the economy, in large part due to ongoing uncertainty around trade policy and the potential for a resurgence of inflation looming ahead,” she wrote in the note that came with the survey.
Market reaction: The 10-year Treasury yield, BX:TMUBMUSD10Y, dropped to 4.28% in early Friday trading, while stocks, SPX, were down.
