The University of Michigan today (4-29-22) released its final Consumer Sentiment Index (CSI) for April. The Index of Consumer Sentiment increased to a reading of 65.2, up from the March reading of 59.4. This is a month-over-month increase of 9.8% but down -26.2% year-over-year (88.3 in April 2021).
The Current Economic Conditions increased to a reading of 69.4 in April, up from 67.2 in March. This is a month-over-month increase of 3.3% but down -28.6% year over-year (97.2 in April 2021).
Finally, the Index of Consumer Expectations increased to a reading of 62.5 in April, up from 54.3 in March. This is a month-over-month increase of 15.1% but down -24.4% year-over-year (82.7 in April 2021).
In remarks and analysis prepared to accompany the release of the preliminary February 2022 CSI, Dr. Richard Curtain (Ph.D., Economics), Director of Surveys for the University of Michigan, said:
“The Index of Consumer Sentiment rose to 65.2 in April, a jump of 9.8% above March. Most of the surge was concentrated in expectations, with gains of 21.6% in the year-ahead outlook for the economy and an 18.3% jump in personal financial expectations. The cause was a sharp drop in gas price expectations, falling to just 0.4 cents from last month’s 49.6. The overall impact on sentiment trends, however, was quite small: other than the last two months, the Sentiment Index in April was still lower than in any prior month in the past decade.
The 1st quarter decline in GDP was no surprise. The downward slide in confidence represents the impact of uncertainty, which began with the pandemic and was reinforced by cross-currents, including the negative impact of inflation and higher interest rates, and the positive impact of a persistently strong labor market and rising wages.
The global economy has added even more uncertainties about prospects for the U.S. economy, including the growing involvement in the military support for Ukraine, and renewed supply line disruptions from the covid crisis in China. Who would not be apprehensive about future conditions, even if on balance they anticipated a continued expansion? Moreover, consumers have lost confidence in economic policies, with fiscal actions increasingly hampered by partisanship in the run-up to the Congressional elections.
Monetary policy now aims at tempering the strong labor market and trimming wage gains, the only factors that now support optimism. The goal of a soft landing will be more difficult to achieve given the uncertainties that now prevail, raising prospects for a halt, or even a temporary reversal, in the Fed’s interest rate policies.
The probability of consumers reaching a tipping point will increasingly depend on prospects for a strong labor market and continued wage gains. The cost of that renewed strength is an accelerating wage-price spiral.”
FEA compiles the Wood Markets News from various 3rd party sources to provide readers with the latest news impacting forest product markets. Opinions or views expressed in these articles do not necessarily represent those of FEA.
Final Results for April 2022