University of Michigan's Index of Consumer Sentiment posts final April reading of 65.2, up from March's 59.4; rising optimism due to a sharp drop in gas price expectations

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April 29, 2022 (press release) –

Final Results for April 2022

                                                         Apr     Mar     Apr      M-M         Y-Y
                                                       2022   2022   2021  Change    Change
Index of Consumer Sentiment        65.2    59.4    88.3    +9.8%    -26.2%
Current Economic Conditions         69.4    67.2    97.2    +3.3%    -28.6%
Index of Consumer Expectations    62.5    54.3    82.7  +15.1%    -24.4%

Next data release: Friday, May 13, 2022 for Preliminary May data at 10am ET

Read our April 7th report: Inflationary Psychology

Read Dr. Curtin's latest paper, Nonconscious cognitive reasoning: A neglected ability shaping economic behavior.
Surveys of Consumers chief economist, Richard Curtin
The Index of Consumer Sentiment rose to 65.2 in April, a jump of 9.8% above March. Most of the surge was concentrated in expectations, with gains of 21.6% in the year-ahead outlook for the economy and an 18.3% jump in personal financial expectations. The cause was a sharp drop in gas price expectations, falling to just 0.4 cents from last month's 49.6. The overall impact on sentiment trends, however, was quite small: other than the last two months, the Sentiment Index in April was still lower than in any prior month in the past decade. The 1st quarter decline in GDP was no surprise (see the chart). The downward slide in confidence represents the impact of uncertainty, which began with the pandemic and was reinforced by cross-currents, including the negative impact of inflation and higher interest rates, and the positive impact of a persistently strong labor market and rising wages. The global economy has added even more uncertainties about prospects for the U.S. economy, including the growing involvement in the military support for Ukraine, and renewed supply line disruptions from the covid crisis in China. Who would not be apprehensive about future conditions, even if on balance they anticipated a continued expansion? Moreover, consumers have lost confidence in economic policies, with fiscal actions increasingly hampered by partisanship in the runup to the Congressional elections. Monetary policy now aims at tempering the strong labor market and trimming wage gains, the only factors that now support optimism. The goal of a soft landing will be more difficult to achieve given the uncertainties that now prevail, raising prospects for a halt, or even a temporary reversal, in the Fed's interest rate policies. The probability of consumers reaching a tipping point will increasingly depend on prospects for a strong labor market and continued wage gains. The cost of that renewed strength is an accelerating wage-price spiral.

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