US Consumer Confidence: Unexpected jump in April, but sentiment still low – Wells Fargo

Preliminary data showed an unexpected increase in the University of Michigan's consumer confidence index. Analysts at WEll Fargo point out that a reprieve in gas prices was "immediately recognized" by consumers in the report. They noted inflation remains the top threat to consumer spending.

Key Quotes: 

“Despite high inflation, ongoing supply chain disruption and uncertainty associated with war, consumer sentiment unexpectedly improved in April. The preliminary reading from the University of Michigan's survey consumer sentiment came in at 65.7, up more than five points from March. The expectations component rose by almost 10 points to 64.1 from 54.3 in the prior month. Still, one robin does not make it spring, and while the improvement in sentiment is welcome, the actual level is still lower than what it has been for much of the past decade. Current economic conditions barely budged at 68.1. That is up slightly from 67.2 in March but below where it was in the first two months of the year.”

“The slight relief in energy prices may have deterred consumers' inflation expectations for the next year from climbing higher, as the median expectation remained at 5.4%. Households across the board cannot escape paying for necessities such as food and shelter.”

“Earlier in this cycle, supply chain disruption was the biggest challenge for the sales of autos and appliances. That scarcity amid robust demand has contributed to the inflation problems that make these items even harder to afford. As policymakers at the Federal Reserve endeavor to get prices in check by raising interest rates, the cost of financing for autos and appliances will rise as well. That may mean that buying conditions will remain low for some time until inflation eventually settles down.”