Americans are becoming more optimistic about the economy
- Consumer confidence partially rebounded in April after falling sharply in the previous month.
- A tight labor market and record highs in financial markets helped shore up confidence.
- Yet consumer confidence still remains below levels seen last fall.
A measure of consumer confidence began to recover in April as Americans became increasingly upbeat about the economy as growth beats expectations and the labor market remains tight.
The Conference Board said Tuesday its index of consumer confidence rose to 129.2 in April, after falling sharply to 124.2 in the previous month. Economists surveyed by The Wall Street Journal had expected a reading of 126.
Americans were more optimistic about present circumstances and expectations for the future. An increasing number of consumers saw the economy doing better in six months, while fewer thought conditions would worsen.
Consumer confidence still remains below levels seen last fall, said Lynn Franco, the senior director of economic indicators at the Conference Board. Growth is expected to slow in the coming months as the effects of stimulus measures fade and trade tensions persist.
But for now, confidence levels should continue to support consumer spending, which accounts for more than two-thirds of economic activity.
"Overall, consumers expect the economy to continue growing at a solid pace into the summer months," Franco said.
On Friday, the Commerce Department said the economy grew far faster than expected at 3.2% in the first quarter. The surprisingly strong results helped to assuage concerns that the decade-long expansion was running out of steam, though underlying trends pointed to weaker growth.
"The headline confidence number was lifted by rebounds in both the current conditions and expectations components, though neither recovered all the ground lost in March," said Ian Shepherdson, the chief economist at Pantheon Macroeconomics. "Still, with the stock market hitting new highs over the past month and labor demand still very strong, we expect a further recovery in confidence over the next couple of months."