CONSUMER CONFIDENCE DIPS IN APRIL FOR 3RD MONTH
Byline: Jennifer Weitzman
NEW YORK — Wall Street’s gyrations and hints of economic uncertainty have put a dent in consumer confidence as well as Americans’ spending plans.
The Consumer Confidence Index slipped for the third consecutive month in April. This month’s Consumer Confidence Index, released Tuesday by the Conference Board, dropped to 136.9 from 137.1 in March. Confidence also dipped in March and February from January’s all-time high of 144.7. In April 1999, the index was 135.5.
But economists warned that April’s drop does not suggest the nation is becoming tight-fisted with its cash or foretell an abrupt deceleration in purchasing ahead.
According to the survey, consumers’ plans to purchase high-ticket items for the next six months have dropped across the board: The percentage of consumers planning to buy a car dropped to 8.2 percent from 8.5 percent, and those expected to purchase a new home fell to 2.7 percent from 4.0 percent.
The index has “dipped to an upbeat level,” said John Lonski, Moody’s Investors Services’ chief economist. He said April’s reading remains historically high and tops the 1999 average of 135.3.
“April’s reading speaks of how well consumers have withstood the volatility in the markets and in previous and forthcoming Federal Reserve Board’s interest hikes and higher energy prices,” he said.
Lynn Franco, director of the Conference Board’s Consumer Research Center in New York, said she was not at all alarmed. “The recent volatility of the financial markets has clearly had little, if any, impact on consumer confidence,” she said. “While consumers rate current economic conditions less positively than last month, their short-term outlook has improved.”
She said a boost in optimism, coupled with tax refunds, should continue to fuel spending.
This month’s decline was mainly caused from a drop in the survey’s Present Situation Index, which measures consumers’ immediate economic expectations and dipped to 180 from 182.5 last month.
The consumer confidence survey is based on a representative sample of 5,000 U.S. households.
On the upside, the survey’s Expectations Index, which measures consumer confidence for the next six months, climbed to 108.2 from 106.8.
The proportion of consumers expecting business conditions to worsen over the next six months dropped to 5.3 percent in April from 6.8 percent in March. The job outlook in April remained virtually unchanged from March. The survey said the percentage of consumers anticipating more jobs available in the coming months increased to 15.8 percent from 15.7 percent.
The survey also noted less optimism for income prospects. In April 22.6 percent of the survey’s participants said they expect an increase in their income, compared with 26.3 percent in March.
“I don’t see consumers applying the brake to economic growth,” said Franco. “Consumers will continue to spend.”