Consumer sentiment improved in April as gas prices moderated but still remains near the lowest level in a decade, the University of Michigan’s survey of consumers showed Friday.
The final April survey of consumer sentiment dipped from the mid-month reading of 65.7 to 65.2 but improved significantly from the 59.4 reading, the lowest in 11 years, in March. This was the highest reading in three months and the first improvement in 2022.
Just prior to the onset of the pandemic lockdowns, the index peaked at 101 in February of 2020. By April, it had fallen all the way down to 71.8, the lowest since 2011. The index’s recovery peaked at 88.3 in April of last year before the surge in inflation led to a renewed slump.
Both the gauge of current conditions and the measure of expectations improved from a month ago.
“Most of the surge was concentrated in expectations, with gains of 21.6 percent in the year-ahead outlook for the economy and an 18.3 percent jump in personal financial expectations,” said Richard Curtin, the chief economist of the survey. “The cause was a sharp drop in gas price expectations, falling to 0.4 percent from last month’s 49.6.”
The overall impact on sentiment trends was small, Curtin noted. Apartment from the prior two months, sentiment is at the lowest level in a decade.
Curtin said that consumers have lost confidence in economic policy. What’s more, Fed tightening threatens to trigger another downward shift in sentiment.
“Monetary policy now aims at tempering the strong labor market and trimming wage gains, the only factors now supporting optimism,” Curtin said.