Consumer Confidence Surges for a Second Month in a Row
The Consumer Confidence Index from The Conference Board jumped again in April, surging 12.7 points to 121.7, the highest level since February 2020 and back into the range consistent with strong economic growth (see first chart).
The two major components of the index both had gains for the month though the index for the present situation soared while the future expectations component posted a modest gain. The present-situation component rose 29.5 points to 139.6, the highest level since March 2020. This measure has posted a two-month gain of 50 points, the largest on record and nearly double the next largest two-month rise. The expectations component gained 1.5 points, taking it to 109.8 from 108.3 in the prior month (see first chart). The details of the report suggest that consumers are growing significantly more optimistic particularly with regard to the labor market as widening vaccine distribution leads to less government restrictions on economic activity.
Regarding general business conditions, the net of the percentage of consumers saying business conditions were good rose 5.0 points to 23.3 while those saying business conditions were bad fell 5.3 points to 24.8 in April. Those results put the net business conditions percentage at -1.5 for April, the best level since March 2020.
For the labor market, the net percentage of consumers saying jobs were plentiful gained 11.4 points to 37.9 while those saying jobs were hard to get fell 5.3 points to 13.2. The net percentage for current labor conditions comes in at 24.7 for April, up from 8.0 in March and well above the -15.7 in April 2020 (see second chart).
Regarding consumer expectations, consumers’ expectations for business conditions in six months, the percentage expecting good conditions added 0.2 points to 40.5 while the net percentage expecting bad conditions rose 0.1 points to 11.9. The net percentage for business conditions six months ahead rose 0.1 points to 28.6.
Consumer expectation for the labor market pulled back slightly, as the percentage expecting more jobs fell 1.4 points to 34.5 while the percentage expecting fewer jobs rose 1.1 points to 15.5. The net percentage for the outlook for jobs came in at 19.0, a decrease of 2.5 points from March.
Overall, the survey results suggest consumer attitudes have become significantly more optimistic. The rollout of vaccines and reduction of government-enforced restrictions on consumers and businesses are driving the improved view of current conditions and the labor market.
Robert Hughes
Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals. Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.
