ANN ARBOR—Consumer confidence has rebounded to nearly its highest level since 2007, according to the Thomson Reuters/University of Michigan Surveys of Consumers.
Conducted by the U-M Institute for Social Research since 1946, the surveys monitor consumer attitudes and expectations.
The April level of consumer confidence was just one index-point below the post-recession peak, according to U-M economist Richard Curtin, director of the surveys. The recent gain, he said, was due to much more positive assessment of consumers’ current financial situations as well as renewed optimism about the outlook for the national economy during the year ahead. View and download the chart and table (Excel files).
Importantly, consumers were slightly more optimistic about future job gains, although most consumers expect only minor improvements in the national unemployment rate during the year ahead, Curtin said. The main attraction of home-buying conditions has shifted in the past few months toward a greater reliance on low mortgage rates and less emphasis on low prices. This has made the continued expansion of home purchases more responsive to changes in the availability of mortgage credit to potential home buyers, he said.
“The most important issue is whether consumers will show greater resistance to the backslides that have repeatedly occurred in the past few years,” Curtin said. “Resilience among consumers is dependent on positive long-term economic expectations.
“While near-term expectations have improved substantially, longer-term expectations for personal finances as well as the overall economy have remained unchanged from a year ago. Hopefully, as the pace of economic growth springs ahead in the coming months, the main beneficiary will be an improvement in long-term economic expectations for personal finances as well as the overall economy.”
The current finances of consumers have improved, but those gains did not make consumers any more optimistic about the future. The proportion that reported worsening finances dropped to 28 percent in April from 37 percent one month and one year ago; this was the lowest level since the April 2007 survey. However, the strong gains did not encourage more optimism for the year ahead, expressed by 32 percent in April, down from 33 percent last month.
Buying attitudes toward durables, vehicles and homes improved among households in the top third of the income distribution, but recorded slight declines among lower income households. The availability of price discounts on household durables were mentioned by just 31 percent in the April survey, the lowest proportion since October 2008, with the decline primarily recorded among lower-income households.
Consumer Sentiment Index
The Sentiment Index was 84.1 in the April 2014 survey, up from 80.0 in March and 76.4 in last April’s survey. There have only been two months that recorded a higher level since 2007: 85.1 in July 2013 and 84.5 in May 2013. Compared with a year ago, nearly equal gains were recorded by the Current Conditions Index (98.7 in April, up 9.8 percent) and the Index of Consumer Expectations (74.7, up 10.2 percent).
About the Survey
The Survey of Consumers is a rotating panel survey based on a nationally representative sample that gives each household in the coterminous U.S. an equal probability of being selected. Interviews are conducted throughout the month by telephone. The minimum monthly change required for significance at the 95% level in the Sentiment Index is 4.8 points; for Current and Expectations Index the minimum is 6.0 points. For more information, visit the Surveys of Consumers website at http://press.sca.isr.umich.edu.
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