University of Michigan’s preliminary consumer confidence index falls in April

The preliminary estimate of the University of Michigan index of consumer confidence dropped in April. The index fell to 97.8 from 101.4, below Barclays expectations of 100. The fall was driven by the current economic conditions sub-index, which dropped 6.2 points to 115. The consumer expectations sub-index also eased to 86.8. The press release stated that the fall was widely shared by all age and income subgroups. However, in spite of today’s fall, consumer confidence continues to be comparatively high, and is in line with solid consumption spending in the months ahead, noted Barclays in a research report.

Delving into details, consumers’ perception of household finances and business conditions versus a year ago turned less favorable, which brought the overall index of current conditions lower. Meanwhile, business expectations dropped. Most consumers expect interest rates to rise, while consumers’ overall perception of the economy dropped.

The press release stated worries about the possible effect of the President’s trade policies on the domestic economy were widely cited, and nearly all these references were negative. Interestingly, the expectations index was as low as 64.2 among those who made negative references to trade policies compared with 93.9 among those who made no mention of them. Meanwhile, the survey indicated a fall in both short-term inflation and long-term inflation expectations, with these measures falling by one-tenth each, to 2.7 percent and 2.4 percent, respectively.

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