Consumers Spend Even as Confidence Ebbs: U.S. Economic Takeaways

  • Purchases jumped in April by the most in almost seven years
  • Confidence unexpectedly falls amid concerns over job market

Behind April's Consumer Spending Numbers

Here’s what you need to know about Tuesday’s U.S. economic data:


  • Consumer spending climbed 1 percent (versus 0.7 percent forecast) after little change in March
  • Incomes rose 0.4 percent for a second month
  • Inflation measure linked to spending increased 0.3 percent from month before, most since May 2015

The Takeaway: The American consumer came back with a vengeance last month. After a sluggish start to the year, households increased spending in April by the most since August 2009. While that kind of jump isn’t sustainable, it signals growth in the second quarter will rebound. At the same time, incomes climbed at a healthy clip consistent with the progress in the labor market, and inflation also picked up, with the Federal Reserve’s preferred gauge rising 1.1 percent in April from a year before, up from 0.8 percent in March. While inflation still has a ways to go to meet the Fed’s 2 percent target, this report confirms policy makers’ expectations that the first-quarter growth slump will prove temporary.


  • Conference Board’s index fell to 92.6 (versus 96.1 forecast), the lowest since November, from a revised 94.7 in April
  • Measure of consumer expectations for the next six months fell to 79, the lowest since February 2014, from 79.7
  • Gauge of present conditions dropped to 112.9, also a six-month low, from 117.1

The Takeaway: The unexpected decline showed households are growing increasingly concerned about the current state of the job market and the economy. If sustained, such worries would make it difficult to sustain the pickup in spending seen at the start of the second quarter (see above). Still, the survey also showed more households this month expected to buy automobiles and homes in the next six months, indicating souring attitudes had yet to influence buying patterns. As Stephen Stanley, chief economist at Amherst Pierpont Securities LLC in New York said in a research note: “The juxtaposition between the robust consumer spending figures and the softer confidence numbers released on the very same day is especially hard to reconcile, but I come down on the side of the spending figures, as it always make sense to follow the actual dollars.”


  • Rose 5.4 percent from March 2015 (forecast was 5.2 percent)
  • Increased 0.9 percent from February, most in four months
  • Nationally, house values were up 5.2 percent from year earlier

The Takeaway: The steady advance in property prices, reflecting the boost from an improving job market and low mortgage rates, is helping lift homeowner wealth. The gains in March were driven in part by limited inventory, and follow a round of more timely data that showed better-than-projected strength in purchases of existing and new homes and contract signings on previously owned houses in April.

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