U.S. Consumer Confidence Slides

U.S. consumer confidence declined in April to its lowest level in five months as higher gasoline costs made Americans uncertain about their economic prospects, a report said Tuesday.

As pump prices skyrocketed along with the cost of crude oil, the Conference Board’s gauge of consumer sentiment dropped to 97.7 from a revised 103.0 in March, roughly in line with Wall Street forecasts.

“Consumers do not anticipate an improvement in economic growth [or] in their incomes,” said Lynn Franco, who directed the research.

Consumer spending is the backbone of the U.S. economy, accounting for two-thirds of activity, so worsening confidence is considered a possible precursor to softer growth.

In recent years, however, the correlation between confidence and retail sales has weakened, with many people buying cars and homes even as they say in surveys that things are getting worse.

Indeed, the data showed an increase in intent to buy items such as major appliances.

The survey’s expectations index declined to 87.2, its lowest in nearly two years, from 93.7. The present situation reading declined to 113.6 from 117. The six-month outlook worsened for the fourth straight month.

“The confidence numbers ... in all likelihood reflect the fact that oil prices, and hence gasoline prices, have been edging up and are quite high,” said Rick Egelton, deputy chief economist at BMO Financial Group.

Changes in views of the labor market were mixed. The proportion of consumers saying jobs were hard to get fell, but so did the share of those who thought jobs would become more plentiful in coming months.