The American Consumer Is Absolutely Excited

Consumer confidence breezed past estimates in April, the Conference Board said Tuesday.

The headline gauge printed 121.7, a pandemic high and above the most optimistic guess from five-dozen economists surveyed. The high-end of the range was 120.

“Confidence has rebounded sharply over the last two months and is now at its highest level since February 2020,” Lynn Franco, Senior Director of Economic Indicators at The Conference Board, remarked.

At the risk of stating the obvious, these gains are material. Now, we’re really starting to retrace the pandemic plunge. For months, confidence measures lagged PMIs and especially equities. Not so much anymore.

While the expectations gauge rose only modestly, the present situation index “soared” (and that’s Franco’s verb choice, not mine). Consumers’ assessment of current business and labor market conditions jumped all the way to 139.6 from 110.1.

“Consumers’ assessment of current conditions improved significantly in April, suggesting the economic recovery strengthened further in early Q2,” Franco went on to remark.

The first read on Q1 GDP is, of course, due later this week. Growth is expected to peak in Q2 (figure below), a year on from the biggest collapse in recorded history.

Notably, the percentage of consumers describing jobs as “plentiful” rose to 37.9% in April from 26.5% in March. Those claiming jobs are “hard to get” dropped to just 13.2% from 18.5%.

Clearly, perceptions of the labor market are shifting. Nonfarm payrolls, due May 7, are expected to show a near 1 million-job gain for April.

“The labor differential component surged to 24.7 from 8.0, registering its highest reading since last March,” Bloomberg’s Cameron Crise marveled, adding that “to put that into perspective, it’s a higher reading than any observation between mid-2001 and mid-2018.”

Finally, I’ll include the obligatory “chart crime” (below). As ever, it’s admittedly apples to oranges, but it’s a crowd pleaser.