US consumers confident, but tariffs neutralize tax reform gains
Consumers remain confident on the state of the U.S. economy, but the positive impact of tax reforms on confidence was neutralized by tariffs in The University of Michigan’s Consumer Sentiment Index for April.
The final reading of the University of Michigan consumer sentiment index was 98.8, up from the initial reading of 97.8 but still below March’s level of 101.4. Still, the reading remains in favorable territory, with consumers expecting the good times to continue.
Consumers are confident that inflation and unemployment will remain low this year, and wages will continue to slowly improve, but some consumers are starting to believe that we are near a peak for the U.S. economy.
According to University of Michigan economist Richard Curtin, director of the surveys, “Perhaps the best single summary of the current state of confidence is that consumers believe the economy is now 'as good as it gets,'" he said. "This view recognizes that the current expansion is approaching an all-time record length and the peak in economic conditions is near."
Curtin also noted that the small variation in the index was due to the favorable impact of tax reform legislation being offset by unfavorable views of the proposed trade tariffs.
"While consumers do not anticipate an economic downturn anytime soon, the long expansion has made consumers somewhat apprehensive about future trends," Curtin added.
Fewer consumers anticipated that the pace of economic growth would increase during the year ahead, but half of all consumers still anticipate the continuation of good times in the economy as a whole.
The current conditions index retreated to 114.9 in April, down from 121.2 in March while the expectations index retreated to 88.4 in April, just below March’s 88.8.