WASHINGTON – U.S. consumer confidence fell in April over concerns about hiring and business conditions, even though many people foresee a strengthening economy in the months ahead.
The Conference Board said Tuesday that its confidence index dropped to 82.3 from a March reading of 83.9. Despite the decline, consumer sentiment for the past two months has been at its strongest levels since January 2008, when the Great Recession was just beginning.
Concerns about the state of the economy fell for the first time since the federal government partially shut down in October.
Jennifer Lee, senior economist at BMO Capital Markets, said consumer sentiment tailed off in April because the pace of hiring, while strengthening, “is still slow, and the tougher environment is hurting American confidence.”
Even though consumers are a bit more downbeat about existing economic conditions, their outlook for future growth held steady, noted Conference Board economist Lynn Franco. The expectations component of the index rose to an eight-month high in April.
Consumer confidence is closely watched because consumer spending accounts for about 70 per cent of the U.S. economy.
The number of people who thought jobs were hard to get rose slightly to 32.5 per cent from 31.4 per cent in March. Economists expect sentiment about the job market to brighten if the pace of hiring quickens.
Employers added 192,000 jobs in March and 197,000 jobs in February, after cold winter weather had caused hiring to stall in the prior months. The unemployment rate held steady at 6.7 per cent last month despite the hiring because more Americans are seeking work. People without jobs are counted as unemployed only when they start looking for one.
The Labor Department will release its April employment report on Friday. Economists have forecast that 210,000 jobs will have been added this month, according to a survey by FactSet.
The April consumer sentiment report showed that households with incomes of more than $125,000 continue to have the most confidence in the economy, as do people younger than 35.
Plans to buy autos and appliances fell in April, while slightly more Americans are considering whether to buy a home, according to the report.
Those purchases could be influenced by interest rates. The Federal Reserve has held rates near historic lows, though mortgage rates have increased over the past year.
At its December, January and March meetings, the Fed trimmed its monthly bond purchases. The purchases have been intended to keep long-term rates low. The Fed has cut back on its bond buying because it deems the recovery to have strengthened.
Fed officials are meeting this week and are expected to further reduce their monthly bond purchases.