Consumer confidence was virtually unchanged in April, falling modestly to 69.2 from March’s revised 69.5 reading.
Although growing enthusiasm about the economy that had been building since last fall may be stalling out, consumers didn’t overreact to modestly disappointing data in the past month. Expectations are for first quarter GDP to moderate to perhaps 2.5%.
Better nonfarm payrolls and a gradual decline in jobless claims late last year and early in 2012 had given a boost to expectations that the economy was gathering a bit of steam, translating to solid improvement in consumer confidence as well. Undoubtedly, the recent weakness in jobs data played a role in putting a modest damper on the consumer mood.
Although consumer spending has been good in recent months, fear remains that unseasonably warm temperatures may have simply pulled forward the surge in spending that typically occurs later in the spring. Whether spending growth continues to surprise to the upside remains to be seen, but the potential for consumers to pause could create a lull in the coming months.
Despite this pause, the overall upward trend in confidence is encouraging, suggesting some degree of resilience despite higher gas prices and the recent relative disappointment in the jobs market.
We continue to anticipate that data in the coming months will provide greater clarity about the degree to which mild weather and seasonal adjustments may have distorted the economic picture. Against that domestic backdrop, coupled with the intermittent attention to the ongoing crisis in Europe, capital market volatility could continue through the spring and into the summer months.