Consumer confidence fell off a cliff in April.
And by that, I mean The Conference Board’s gauge dropped 31.9 points from March, the most in 47 years. The index now sits at 86.9. This is one time when consensus was bang-on. The estimate was 87 (the forecast range was 65-103).
Remember, last month witnessed a steep drop too. After two months, February’s print isn’t even visible from down here.
The Present Situation Index fell the most on record, suffering a comical 90-point decline to 76.4 from 166.7 prior.
That, Lynn Franco, Senior Director of Economic Indicators at The Conference Board, said, “reflects the sharp contraction in economic activity and surge in unemployment claims brought about by the COVID-19 crisis”. Thanks, Lynn.
The Expectations index, though, actually improved, printing 93.8 from 86.8 in March. That disconnect – between the assessment of things as they are now, and how things will look later – reflects a similar disparity in the University of Michigan’s sentiment gauges, and continues to suggest that Americans view the coronavirus crisis as cyclical, not systemic.
“Consumers’ short-term expectations for the economy and labor market improved, likely prompted by the possibility that stay-at-home restrictions will loosen soon, along with a re-opening of the economy”, Franco went on to say, before cautioning that “consumers were less optimistic about their financial prospects and this could have repercussions for spending as the recovery takes hold”.
Not surprisingly, consumers’ take on the labor market deteriorated markedly. Those saying jobs are “plentiful” plunged to 20% from 43.3%, while those saying jobs are “hard to get” surged from 13.8% to 33.6%.
Meanwhile, Kevin Hassett (who returned to the White House to advise on the crisis) showed up on CNN and delivered a series of remarks which underscore the severity of the situation as it stands now.
Second quarter GDP will be “a big negative number”, Hassett said, adding that a rebound in the second half of the year depends heavily on the next aid package. Remember, the virus relief bills passed so far aren’t really “stimulus” given there’s nothing to “stimulate” – right now, we’re merely ensuring everyone doesn’t become insolvent. It is only in the next bill that spending can be realistically construed as stimulative.
Later, Hassett told reporters it’s “very likely there’ll be a phase-four deal and we’re going to be speaking with the president throughout the week about what he thinks should be in there”. It’s possible that more direct payments to struggling Americans are in the cards, he said.
In case you were curious, Hassett sees the jobless rate rising as high as 20% by June. He characterized a recovery later this year as follows: “God willing”.