Consumer Mood Sours as Inflation Fears Grow
U.S. consumer confidence fell for a third straight month in April, hitting its weakest in 26 years, on heightened worries over inflation and the sagging housing market, a survey showed Friday.
The Reuters/University of Michigan Surveys of Consumers said its final index of confidence for April fell deeper into recessionary territory, to 62.6 from 69.5 in March and below economists' median expectation of 63.2 in a Reuters poll.
The April result is the lowest since March 1982's 62.0, when the "stagflationary" period of low growth and high inflation was still an issue for many Americans.
Short-dated Treasury debt prices briefly edged higher after the release of the data, while stocks briefly turned negative or extended prior losses.
"More consumers reported that their personal financial situation had worsened than any time since 1982 due to high fuel and food prices as well as shrinking income gains and widespread reports of declines in home values," the survey said.
"Never before in the long history of the surveys have so many consumers reported hearing news of unfavorable economic development as in the April survey."
Nearly nine in 10 consumers thought the economy was now in recession, Reuters/University of Michigan said.
While a tax rebate will bolster consumer spending, consumers favor "by a wide margin" using the rebate to repay debt and to add to their savings, according to the surveys.
The report showed its reading on one-year inflation expectations climbed to 4.8 percent—the highest since a similar reading in October 1990—from 4.3 percent in March.
Five-year inflation expectations rose to 3.2 percent from 2.9 percent in March.
The index of expectations for personal finances fell to 100, the lowest since August 1993, from 112 in March, while the index of current personal finances dropped to 86 in April, which was the lowest since November 1981, from 93 last month.