U.S. consumers' views on the economy and its outlook weakened modestly in the middle of April, according to a report released recently.
Sources who'd seen the University of Michigan's (Ann Arbor, MI, U.S.) preliminary report on consumer sentiment for April said that its overall index slipped to 93.2, from 95.8 the month before.
The Michigan data is released only to subscribers. Economists surveyed by Dow Jones Newswires had expected to see a softening, but not as big as the one that occurred. The median finding of the survey was for a reading of 93.9.
The reading on consumer expectations was said to have moved to 86.2 from 88.8 at the end of March. The current conditions index fell to 104.1, versus 106.8 in March.
The Michigan data, like all consumer confidence reports, isn't all that well correlated with actual changes in consumer spending, which is the factor the U.S. Federal Reserve (the Fed) policymakers say is the more critical thing to watch.
Recent economic data suggest that consumers' mood should be rising, after seeing strong hiring gains and solid retail spending during March, of a magnitude that's got many on Wall Street, the center of U.S. financial activity, mulling the possibility of a summer interest rate hike from the Fed.
Fed policy makers have given a tentative "thumbs up" to the recent news, but have cautioned that they'll need to see the numbers repeated before they'll be sure that a trend is in the making.
Federal Reserve Bank of Richmond (Richmond, VA, U.S.) Fed President Alfred Broaddus said rates will have to rise if the expansion continues, but "We are still some distance from that."
Dana Johnson, an economist at Banc One Capital Markets, in Chicago, IL, U.S., downplayed the softening in preliminary April Michigan data. "Notwithstanding this mediocre recovery in confidence, actual consumer spending has clearly accelerated. That reinforces my long-held view that consumer confidence is not a very useful guide to emerging spending patterns," he said in a note to clients.
The preliminary Michigan findings are based on a telephone survey of around 250 households. A final survey at the end of the month questions 500 households. (Associated Press)
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