Consumer Sentiment Remaining Positive

Sentiment remains steady

Consumers are becoming more upbeat about the economy, as the Consumer Reports Index in April remained positive  for the second consecutive month.

The index points to an improving employment climate, higher consumer spending, and a reduction in overall household financial stress for the American consumer.

"While the economy still has a way to go before we can say a recovery has taken hold, consumers are in a better spot than they were last year and we’re seeing an improving trend," said Ed Farrell, a director of the Consumer Reports National Research Center.  

The Consumer Reports Sentiment Index was at 50.2, which is close to last month’s 50.3, when the index was in positive territory for the first time since it was launched in 2008 and is up substantially from a year ago (43.7).  

"Some of the more positive signs have been a rise in job creation, an increased willingness to spend on the consumers’ part and people responding to the survey saying they are encountering less stress than in previous months. Sustaining these gains is contingent upon improvements in hiring," Farrell added.

The Consumer Reports Employment Index showed that more jobs were created than lost in the past 30 days and pushed into positive territory (50.5), representing the third consecutive month of improvement.  In April, 6.5 percent of those surveyed reported starting a new job versus 5.5 percent of people claiming to have lost their job in the past 30 days.  

These improvements appear to have set the stage for increased consumer spending.  Retail spending activity increased substantially from the prior month and the comparable year-ago period, according to the Consumer Reports Past 30-Day Retail Index, which rose to 12.6 in April from 10.5 the preceding month.  Projected retail spending also showed a substantial increase in the Next 30-Day Retail Index to 9.4 in April from 7.6 a month ago.

"Consumers we asked last month said they were likely to be a bit more frugal, but the results show that actual spending was higher than they previously had planned," Farrell said.

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  1. The Index of Consumer Expectations (a component of the Index of Leading Economic Indicators) dropped to 67.2 and the Current Economic Conditions Index declined slightly to 80.8.

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