Summary: US consumer confidence up sharply in April; Conference Board index “soars”; increase noticeably more than expected; view of present conditions jumps, view of future conditions improves more modestly; income prospects improve on job market, stimulus cheques.
After the GFC in 2008/09, US consumer confidence clawed its way back to neutral over a number of years and then went from strength to strength until late 2018. Measures of consumer confidence then oscillated within a fairly narrow band at historically high levels until they plunged in early 2020. Subsequent readings then fluctuated around the long-term average until March this year.
The latest Conference Board survey held during the first half of April indicated US consumer confidence improved for a fourth consecutive month. April’s Consumer Confidence Index registered 121.7, well above the median consensus figure of 111.9 and considerably higher than March’s final figure of 109.0. Consumers’ views of present conditions and future conditions both improved; the Present Situation Index “soared” from 110.1 to 139.6 while the Expectations Index rose much more modestly, from 108.3 to 109.8.
“Consumers were more upbeat about their income prospects, perhaps due to the improving job market and the recent round of stimulus cheques,” said Lynn Franco, a senior director at The Conference Board.
Long-term US Treasury bond yields moved a touch higher on the day. By the close of business, 10-year and 30-year Treasury bond yields each ticked up 1bp to 1.63% and 2.30% respectively. The 2-year yield remained unchanged at 0.18%.
In terms of US Fed policy, expectations of any change in the federal funds rate over the next 12 months remained low. Federal funds futures contracts for April 2022 implied an effective federal funds rate of 0.11%, about 4bps above the current spot rate.
“The index’s breakdown suggests, the latest round of stimulus payments alongside the improving COVID picture is making the US consumer feel pretty good about the economy and their household finances today,” said NAB currency strategist Rodrigo Catril.