Key Points

  • Consumer confidence unexpectedly rose to 92.8 in April, up 0.6 percentage points from March, according to data released Tuesday by The Conference Board, mainly due to improved consumer assessments of the current and future job market.
  • The proportion of respondents who said jobs are "hard to get" fell to 19.8% from 21.3% in March, while those expecting more job opportunities rose to 16.1% from 15.4%. Dana Peterson, chief economist at The Conference Board, noted that despite declines in assessments of current and expected business conditions, consumers' moderate improvements in labor market (current and expected) and income expectations offset this impact.
  • The rebound in consumer confidence aligns with the stance of Federal Reserve officials opposing a rate cut at the two-day policy meeting ending this Wednesday (April 22). Previously, before the outbreak of the Iran war, labor market weakness had prompted some officials to lean toward rate cuts to guard against rising unemployment, but the war-induced oil price surge and signs of labor market stabilization have weakened calls for rate cuts.

In-Depth Analysis

Consumers' optimistic outlook on the labor market and future job opportunities provides support for Federal Reserve officials opposing a rate cut at the policy meeting ending this Wednesday (April 22). According to the FedWatch tool from CME Group, interest rate futures traders expect the Fed to hold the federal funds rate steady in the 3.5% to 3.7% range this week, with a 79.7% probability of rates remaining unchanged throughout the year.

However, the improvement in consumer confidence contrasts with some negative sentiment indicators. A Gallup survey released Tuesday showed that a record 55% of Americans said maintaining their standard of living has become more challenging due to worsening financial conditions, compared to 47% in 2024 and 53% last year. Additionally, this month's University of Michigan survey showed consumer sentiment fell to its lowest point since data collection began in 1978, driven by higher gasoline prices from the Iran war.

According to AAA data, the national average gasoline price has surged about 40% since U.S. and Israeli warplanes launched airstrikes on Iran on February 28, rising from $2.98 per gallon to $4.18 on Tuesday (April 22). Data released last Friday (April 18) by the University of Michigan showed consumers' inflation expectations for the next 12 months jumped 0.9 percentage points to 4.7%.

Despite inflationary pressures, consumer spending has not contracted. U.S. Census Bureau data show that the gasoline price surge drove gasoline spending and overall retail sales up 1.7% month-over-month in March, following a 0.7% increase in February; excluding gasoline spending, retail sales rose 0.6% month-over-month.

The Conference Board said consumers' open-ended responses about factors affecting the economy "continued to lean pessimistic in April" and noted that "consumers remain cautious." The organization stated: "Compared to March, the frequency of comments about prices, oil and gas, and war increased—this may signal consumers' underlying concerns about how the Middle East war will affect their financial situation." It also noted that during the survey period from April 1 to 22, the two-week ceasefire agreement with Iran and the stock market rebound may have helped ease consumers' concerns about financial trends, but emphasized that consumers' inflation expectations for the next 12 months remain "elevated."