Consumers’ outlook on the economy has increased for four straight months as vaccination totals rise, businesses more fully reopen.
Consumers’ confidence in the U.S. economy rose sharply in April as more people received vaccinations, stimulus payments reached households and businesses more fully reopened.
The consumer confidence index increased to 121.7 in April from a revised 109.0 in March, the Conference Board said Tuesday.
Recent improvements led the index to a more than one-year high, with the indicator approaching the pre-pandemic level of 132.6 in February 2020.
“Consumers were more upbeat about their income prospects, perhaps due to the improving job market and the recent round of stimulus checks,” said Lynn Franco, senior director of economic indicators at the Conference Board.
The labor market has recently shown signs of accelerating. Employers created more than 900,000 new jobs in March and the unemployment rate ticked down to 6%. Worker filings for unemployment claims have also declined to pandemic lows in recent weeks.
The present situation index, which reflects consumers’ assessment of current business and labor market conditions, surged to 139.6 in April from 110.1 in March. This improvement suggests that the economic recovery strengthened further at the beginning of the second quarter, Ms. Franco said.
The expectations index, which gauges short-term outlook for income, business and labor market conditions, also increased, albeit to a lesser degree, to 109.8 in April from 108.3 the prior month.
The continued rise in confidence bodes well for consumer spending in the coming months, said Jonathan Silver, founder and chief executive of data platform Affinity Solutions, which collects spending data from credit and debit card transactions.
Recent data points to an uptick in spending from higher-income households after months pulling back even though top earners weren’t eligible for the latest round of stimulus payments. Until March, the increase in spending was mainly driven by low-income consumers, he said.
“That’s very encouraging and indicates a likelihood that [the increase in consumer spending] will be sustainable going forward,” Mr. Silver said.
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