U.S. Consumer Confidence Rises In April As Inflation Fears Fall

Consumers felt better about the short-term outlook for the economy in April as expectations about the pace of inflation and concerns about the labor market eased.

Even so, the overall consumer confidence reading was low by historical standards, and in a reminder of some of the weaker spots in the economy, a separate report on Tuesday showed the housing market continues to struggle: home prices fell for an eighth straight month in February, inching closer to an April 2009 trough.

The Conference Board, an industry group, said its index of consumer attitudes rose to 65.4 in April from a revised 63.8 in March. The reading topped analysts' forecasts for 64.5. March was originally reported as 63.4.

The present situation index climbed to its highest since November 2008, rising to 39.6 from 37.5 the month before. The expectations index climbed to 82.6 from 81.3, and consumers' expectations for inflation in the coming 12 months fell to 6.3 percent from 6.7 percent.

Despite the fall in the proportion of those who said jobs were hard to get, to 41.8 percent from 44.4 percent the month before, the longer term view was mixed.

Those expecting more jobs in the next six months declined to 17.5 percent from 19.6 percent, while those anticipating fewer jobs in the months ahead also declined to 19 percent from 20.5 percent.

"Confidence improved in April, but consumers remain far from optimistic," Chris Low, chief economist with FTN Financial Group, wrote in a note.

Higher energy prices from the political unrest in the Middle East and North Africa have weighed on consumers lately and there has been debate over whether the price increases will be temporary.

"In our view, confidence is not likely to go up meaningfully until gas prices and unemployment come substantially down," Wells Fargo said in a note.

The U.S. economy faces new headwinds from soaring oil prices, U.S. Treasury Secretary Timothy Geithner said on Tuesday, but he said a forecast of 3 to 4 percent growth seemed reasonable.

HOUSING PRICES SCRAPE 2009 LOWS

The consumer data gave U.S. stocks a lift, as did solid earnings from bellwether companies.

Separate data on Tuesday showed the housing market continues to struggle as U.S. single-family home prices fell for an eighth straight month in February, inching closer to an April 2009 trough.

The S&P/Case-Shiller composite index of 20 metropolitan areas declined 0.2 percent in February from January on a seasonally adjusted basis, slightly better than economists' median forecast for a drop of 0.3 percent.

The 20-city composite index was at 139.27, holding just a hair above its 2009 low of 139.26. Average home prices across the United States are back to levels where they were in the summer of 2003, S&P said.

Prices in the 20 cities have fallen 3.3 percent year over year, in line with expectations.

"There is very little, if any, good news about housing. Prices continue to weaken, trends in sales and construction are disappointing," David Blitzer, chairman of the Index Committee at S&P Indices, said in a statement.

The glut of houses up for sale has kept prices low and the market has struggled to regain traction since a home buyer tax credit expired last spring.

Other data in the last week has suggested some stabilization in the market with sales of new and existing homes rising in March.

"House prices are still falling due to distressed sales. But the pace of price decline is slowing so things seem to be stabilizing," said Rudy Narvas, senior economist at Societe Generale in New York.

Focus was also on the Federal Reserve officials meeting Tuesday and Wednesday with the discussion likely to focus on the central bank's next move in its monetary stimulus policy.

The Fed looks certain next week to stick to its plan to complete its $600 billion bond-buying program in June, and is unlikely to rush to tighten policy given an uncertain economic outlook.

(Additional reporting by Richard Leong; Editing by Padraic Cassidy)
Copyright 2011 Thomson Reuters. Click for Restrictions.

Comments

[vippy]

02:20 PM on 04/27/2011

Maybe this is a good spot to remind people of Senator McFadden who was a great foe of the FED, which he said was created and operated by European banking interests who conspired to economically control the US.  In his speech to the House of Rep, in which he accused the FED of deliberately causing the Great Depression.  He claimed that Wall Street Bankers funded the Bolshevik Revolution thru the FED and European Central Banks. He then moved to impeach Herbert Hoover in 1932, and introduced a resolution bringing conspiracy charges against the Board of Governors of the FED.  The resolution was defeated by a vote of 36 to 8, a big vote of confidence to Pres. Hoover from the House!  Corporate media will not allow this to become common knowledge and is too complicated for the average person to understand who would rather live in their hate filled ideology than to take a hard look at what is really happening!

[vippy]

02:04 PM on 04/27/2011

Someone made this up.  It just ain't happening! 

[wolf58]

08:04 AM on 04/27/2011

Energy prices being driven up by Wall Street specualtion is causing everything else to go up and fears of inflation fall? I understand that the American public can be ignorant of the facts but hey every time they go to the pump or the grocery store they see and fear the inflation that Wall Street is causing. I guess when you survey the top they would say all is good but the rest of the nation would not agree...

[Warren Lauzon]

03:57 AM on 04/27/2011

That makes no sense. Massive inflation is not only coming, it has already opened the door.

Almost anything you buy now is higher than it ever was, and there are massive amounts of money still sitting on the sidelines. If that money starts coming out of the woodwork, you can expect Carter 2.0 unless the dollar starts regaining some value.

[vippy]

02:06 PM on 04/27/2011

Dollar fell again today when the FED announced not to raise intest rates but this way the USA is digging itself out of the debt with foreign countries such as China, think about it!

[Leadsled]

06:48 PM on 04/27/2011

It really isn't. We are actually at serious risk of a coming period of deflation. Your knowledge of economics is clearly lacking.

Quite simply if you track historical inflation rates you'll see that they essentially have no relation to the money supply or the value of the dollar on foreign markets.

Additionally a weak dollar is good for the US it reduces our imports and increases our exports.

[Peanut Santiago]

12:46 AM on 04/27/2011

"U.S. Consumer Confidence Rises In April As Inflation Fears Fall"

Where?

Not where I live. Not where my family lives. Not where some of my old friends live.

Where?

Sounds like manure to me.

[altohone]

11:39 PM on 04/26/2011

Higher energy prices from the political unrest is factually wrong. Speculators are gaming the market. It's fraud just like the so called California Energy Crisis.
This report crosses the ethical boundaries of the profession by blaming the wrong cause without any substantiation or proof.
Those committing this fraud are spinning feverishly to avoid blame, and journalists doing their bidding are well down the slippery slope.

[mickflynn]

10:04 PM on 04/26/2011

Corn at $8/bushel, gas at 3.99/gal in wisc and food prices soaring out of control. Yea I can see why nobody's worried about inflation. Back to reality...why are we paying farmers not to grow food and why are we subsidising ethynol? Anyone?

[Warren Lauzon]

03:58 AM on 04/27/2011

Couldn't have anything to do with political contributions. Nah...

[Leadsled]

06:44 PM on 04/27/2011

None of those things are counted in calculating inflation because food and energy prices tend to be disassociated with core inflation. In other words, food and energy prices rising doesnt mean much at all for inflation, other than running the risk of bringing about deflation in the rest of the economy (due to food and energy use being inelastic as prices rise there it causes people to shift increasing amounts of their income to food and energy and consequentially reduces consumer demand for other goods).

Quite simply the prices you quote raise the grave spectre of deflation and as such actually are signs of the precise opposite of inflation.

[jcaunter]

06:30 PM on 04/26/2011

As the saying goes, as long as you don't have to eat or drive to work then you have nothing to worry about from inflation!

Plus, you can buy an Ipad2 for the same price as you got the Ipad1. So actually, inflation is going in reverse according to the Fed.

http://www.zerohedge.com/article/former-goldmanite-and-head-new-york-fed-several-career-risk-free-restless-natives-let-them-e

[Leadsled]

06:46 PM on 04/27/2011

Neither of those count as inflation. Food and energy arent counted in inflation calculations because they dont really track with inflation across the rest of the economy. They are cyclical, highly volatile due to extraneous impacts (like Libya and other middle eastern instability which is the main cause for all those energy and food price changes of late), and increases in food and energy prices actually tend to bring about deflation in the rest of the economy.

[kenhamlett]

03:11 PM on 04/26/2011

If, as the headline says, inflation fears have eased, we should probably not look forward to next month's report. Those fears will certainly be back by then.

[Leadsled]

04:38 PM on 04/26/2011

Only because people dont understand the CPI, since there is no sign of inflation in the CPI and hasnt been for years. We simply have nothing to fear from CPI inflation.

Energy and food issues are different in that they are far more supply and demand based in price rather than really drivers of general inflation. In fact, inflation in food and energy sectors can bring about deflation in the rest of the economy as consumers funds get pushed into those two sectors, crowding out other forms of consumption.

[kenhamlett]

04:57 PM on 04/26/2011

I actually do have a pretty good understanding of the CPI and I understand that it is being used to downplay and underestimate inflation. I also understand that inflation in some sectors can lead to deflation. That is still an abiding fear in our current situation. We have lost control of our own destiny, and we are at the mercy of others in these regards, and that causes me far more concern than it seem to cause our political leaders in both parties.

[ssmithlg]

02:32 PM on 04/26/2011

The headline reads : "U.S. Consumer Confidence Rises In April As Inflation Fears Fall"
WTF (not to be confused with Winning The Future) are these Reuters writers smoking?

[Peanut Santiago]

12:47 AM on 04/27/2011

I dunno, but it must be good stuff.

[nanimal]

02:27 PM on 04/26/2011

I don't understand why inflation fears are falling...we do have inflation WITH high unemployment. the Fed is doing such a stand up job with the economy. They sghould be FIRED!

[Leadsled]

04:38 PM on 04/26/2011

We don't have inflation. Inflation rates at present are, and have been for years, near historic lows. You are simply misinformed if you think otherwise.

[nanimal]

05:26 PM on 04/27/2011

You are misinformed...Here is a link to US inflation rate tables as you will see we have nearly double the inflation rate of 2010. It is interesting to see 2008 was completely flat.

http://www.usinflationcalculator.com/inflation/current-inflation-rates/

[Peanut Santiago]

12:47 AM on 04/27/2011

Don't believe everything you read. {wink, wink}

[formontoya]

01:58 PM on 04/26/2011

How can we even remotely say there's no inflation? How can food and gas NOT be included in the mix (it's required by everyone...well food is anyway)?

No inflation...one of the biggest lies being told.

[Leadsled]

04:42 PM on 04/26/2011

Because food and energy prices have very little to do with prices throughout the rest of the economy, or rather they respond to very different stimulii than do other items. This is why they arent used in inflation calculations. For instance, high gas prices right now are not a sign of inflation at all, they are a sign of political instability in the middle east.

Additionally they act in a way to actually go against inflation in the rest of the economy. Rising food and gas prices crowd out other forms of consumption and result in deflation in the rest of the economy as fewer people can afford other goods and even then purchase fewer of them.

It would be sheer insanity to count food and energy prices in normal inflation calculuses. Currently there is pretty much zero inflation in our economy, and that is likely to reduce even more if gas and food prices continue to rise (due to as I pointed out about the way these prices effect other prices). That is a bad thing. A healthy level of inflation, between 2 and 3 percent is the best of all possible options, it is far preferable for an economy's health than higher levels OR than deflation, deflation being something everyone should fear far more than inflation.

[Peanut Santiago]

12:51 AM on 04/27/2011

Let's see if I get it.........paying higher fuel and food prices means we have less money for other things.
And that could lead to deflation in the price of other things.

I don't know about you, but we ordinary workers have only so much money (income) and if things cost more, we risk not being able to pay our necessary bills.

Inflation, deflation......it is BAD when we are barely able to pay for our necessities and it is WORSE when our paychecks don't even cover the necessities.

[javajava]

01:49 PM on 04/26/2011

Alot of folks have decent jobs and still are in thier homes. They have two cars, savings and managable debt. They are fat and reasonable optimistic about their futures. The uncertainty is when they look out of the bubble and see what could happen.

This is real and this is the place fearmongers want to keep us in.

We crashed, no doubt, but there was no depression. The way I see it is we can stay stuck or try and put it back together. And, prepare for the next time stuff goes wrong because it most certainly will.

[bluejoni2525]

06:58 PM on 04/26/2011

One of the most reasonable posts I have read on the subject in a while !!! Faved already a fan !!

[Sundialsvc4]

01:23 PM on 04/26/2011

Don't stare too much at tenths of percentage points.

You can go blind that way.

[OSCPJ]

01:45 PM on 04/26/2011

And how much of that is due to inflation no one will admit?  Let me guess, GDP up when everything cost more.  Yeah.

[Leadsled]

04:43 PM on 04/26/2011

But everything doesnt cost more, so yeah, you're wrong.

[BBackSoon]

01:13 PM on 04/26/2011

Those questioned must be people that don't regularly go to the grocery store or the gas station.

Or are those two items too volatile so they don't measure them?

[Leadsled]

04:47 PM on 04/26/2011

Its actually several factors for why those two items arent in the CPI (consumer price index). First as you suggested those two prices tend to not only be volatile but also seasonal. Gas prices are almost always higher in summer than winter by a fairly large amount. It would distort measuring inflation across other products to include these season swings. Additionally, they are highly responsive to outside factors, like political instability in Libya, which is the main cause of these current increases.

Secondly, these two items actually can have the effect of causing deflation and recession across the rest of the economy. Demand for gas and food tends to be inelastic, people need to eat and they need to get to work, meaning that as you raise prices in those sectors, rather than reducing consumption (and hence demand) of those products people have to spend larger % of their incomes on those products. Thus, people have far less money to spend on other consumption, so you will likely see sales reductions in much of the rest of the economy which results in recessionary type events (reduced sales = job reductions = fewer people with money to consume = reduced sales...) which ends up bringing about deflation in there rest of the economy as wages and prices are forced to fall in other sectors due to the ever increasing share of people's wealth spent on food and energy.