The Conference Board released its April Consumer Confidence Index this morning at 10am Eastern, and the headline number disappointed again. The index fell to 86.0 from a revised 92.9 in March, the lowest reading since June 2022 and the fifth straight monthly decline. Economists surveyed by Reuters had expected 88.0. The Present Situation Index, which measures how households feel about current business and labor conditions, dropped to 124.6 from 130.4. The Expectations Index, which tracks the six month outlook, fell to 60.2. Any reading on Expectations below 80 has historically signaled recession risk, and this is the third consecutive month under that threshold.
The internals were the part economists watched closest. The share of consumers who said jobs were "plentiful" fell to 31.2 percent from 33.4 percent in March. The share who said jobs were "hard to get" climbed to 18.7 percent. That gap, called the labor differential, narrowed to 12.5 points from 17.4 in February. The labor differential is one of the cleaner real time gauges of the unemployment rate trend, and the Conference Board's chief economist Stephanie Guichard noted in the release that the recent compression "is consistent with the unemployment rate drifting up over the next two to three months." The April nonfarm payrolls report on Friday May 8 will test that read.
Tariffs showed up explicitly in the write-in responses for the second straight month. The Conference Board flagged that mentions of tariffs in the open ended question section were "the highest since the survey began tracking the topic." Consumers wrote about higher prices on appliances, electronics, furniture, and groceries. Twelve month inflation expectations rose to 7.0 percent from 6.5 percent in March, the highest since November 2022. The expected change in the stock market over the next twelve months also turned more pessimistic, with 48.5 percent of households expecting prices to fall versus 33.4 percent expecting a rise.
Income expectations, often the last shoe to drop in a confidence cycle, finally cracked. The percentage of consumers expecting their family income to increase over the next six months fell to 16.7 percent from 18.8 percent. The percentage expecting income to decrease rose to 15.4 percent. That spread of 1.3 points is the narrowest since April 2020. When households start expecting their own pay to flatten or decline, discretionary spending tends to compress within one to two quarters. Conference Board buying plans for cars fell to 10.8 percent of respondents over the next six months, the lowest since 2013. Home buying plans dropped to 4.7 percent.
The release lands in a busy week for macro data. The first estimate of Q1 GDP comes Thursday at 8:30am with consensus at 1.4 percent annualized, the slowest quarter since Q4 2022. The March PCE report follows Thursday afternoon with core PCE expected at 2.6 percent year over year. April nonfarm payrolls on Friday May 8 are tracking around 145 to 160 thousand with unemployment expected to tick up to 4.3 percent. The Federal Open Market Committee meeting concludes Wednesday with a unanimous expected hold at 4.25 to 4.50 percent. Powell's final FOMC press conference before his term ends May 15 will be parsed for guidance on the June 16-17 meeting.
The political backdrop is also weighing on the data. The Department of Homeland Security funding fight enters its 73rd day Wednesday, with TSA officers still working without pay and the May 8 payroll cliff approaching for the second time. Approximately 412 thousand federal workers are affected. Approximately 838 TSA officers have resigned since the lapse began. Travel demand has held up so far, but airline executives on Q1 calls flagged the funding situation as a Q2 risk. United Airlines CEO Scott Kirby said on the company's Q1 call that bookings into May "have softened modestly in the last three weeks" and that the company is watching staffing reliability at TSA checkpoints.
Conference Board data is one of two main consumer surveys economists track. The University of Michigan reading, which puts more weight on inflation expectations, has been weaker than the Conference Board for four straight months and currently sits at 50.8, the lowest since records began in 1978. The two surveys typically converge within one to two quarters. The April Conference Board reading suggests the Michigan signal was leading the cycle. Goldman Sachs cut its Q2 GDP tracking estimate to 1.1 percent from 1.4 percent following the release. JPMorgan held at 1.3 percent. Bank of America's economists wrote that "the labor differential, expectations index, and tariff mentions all point to a soft patch that will be visible in the spring data."
Markets reaction was muted. The S&P 500 was flat in the minutes after the release, with the Russell 2000 down 0.4 percent and the 10 year Treasury yield slipping to 4.27 percent. Traders are pricing in a 64 percent chance of a 25 basis point cut at the June FOMC meeting, up from 55 percent before the release. The next major reading on consumer health is the April retail sales report on May 15.