The Conference Board recently released its Consumer Confidence Index numbers for April, which continued to fall overall to 101.3 from 104.0 in March. That's the lowest level since July 2022, according to CNN.
In general, confidence measurements are important in business and economics because psychological and social attitudes can drive the economy towards what people expect. If individuals and businesses are concerned about degrading conditions, for example, they will likely pull back from spending and investing, taking defensive measures for themselves. Magnified through masses of persons and organizations, that can mean a shrinking economy that can then push for less employment and, as a result, the recession that concerned everyone arrives through their reactions.
It's not as though everything was bleak. "The Present Situation Index—based on consumers' assessment of current business and labor market conditions—increased to 151.1 (1985=100) from 148.9 last month," the report said. Could certainly be worse, although it isn't a glowing endorsement, as 18.8% of consumers said business conditions were "good." But then, 18.1% said they were "bad." Just under half (48.4%) said jobs were "plentiful" and 11.1% said they were "hard to get."
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Where the concern grew was in the Expectations Index, which is a measure of "consumers' short-term outlook for income, business, and labor market conditions." That fell to 68.1, down from 74.0, again with the index base being 1985. With the brief uptick in December 2022, that number has been under 80—a level associated with a recession coming within a year—constantly since February 2022. Note that expectations can work in complex ways, so expectations under 80 isn't the same as a closer promise of a recession.
"While consumers' relatively favorable assessment of the current business environment improved somewhat in April, their expectations fell and remain below the level which often signals a recession looming in the short-term," said Ataman Ozyildirim, senior director of economics at The Conference Board, in the report. "Consumers became more pessimistic about the outlook for both business conditions and labor markets. Compared to last month, fewer households expect business conditions to improve and more expect worsening of conditions in the next six months. They also expect fewer jobs to be available over the short term. April's decline in consumer confidence reflects particular deterioration in expectations for consumers under 55 years of age and for households earning $50,000 and over."
"Meanwhile, April's results show consumer inflation expectations over the next 12 months remain essentially unchanged from March at 6.2 percent—although that level is down substantially from the peak of 7.9 percent reached last year, it is still elevated," Ozyildirim continued. "Overall purchasing plans for homes, autos, appliances, and vacations all pulled back in April, a signal that consumers may be economizing amid growing pessimism."
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