Upswing in consumer confidence loses steam in April
WASHINGTON -- The surge in optimism among consumers about the economy in recent months has largely halted in April as slower job growth led to a slightly more pessimistic view of the recovery, according to a leading barometer.
The Thompson Reuters/University of Michigan Survey of Consumers increased just 0.3% when measured in April compared with the previous month. The 76.4 figure was a 9.5% improvement over a year ago, but reflected a slowdown in the rate at which the index had been rising since the end of last summer.
Still, April is the eighth straight month that the index has risen after bottoming out at 54.9 in August, the lowest reading since 1980.
But tax hikes looming in 2013 could weaken consumers’ outlook on the economy in coming months, said Richard Curtin, the survey’s chief economist.
“To avoid the midyear relapses of the prior two years, it would be best to quickly reduce uncertainty about future tax rates which are now scheduled to increase at the start of 2013,” he said, urging Congress to act soon to decide the fate of the George W. Bush-era tax breaks set to expire at year’s end.
“If no decision about bridging the fiscal cliff is made until after the November election, consumers are likely to become more cautious spenders, especially higher-income households toward year end, and those delayed spending decisions will become more widespread the closer the election,” he said.
Consumers’ assessment of current economic conditions dropped 3.6% in April as the financial situation of all economic groups weakened. But consumers’ expectations of their future economic prospects increased 3.6%, and they had their best five-year outlook since mid 2007.
Still, only one out of four households anticipated their financial situation would improve in the coming year, the survey found. That figure has been steady for the first four months of 2012.