US consumer sentiment deteriorates in April

(Sharecast News) - US consumer sentiment unexpectedly deteriorated in April as the previous boost from tax cuts evaporated, according to a preliminary reading from the University of Michigan.The consumer sentiment index fell to 96.9 from 98.4 in March and 98.8 in April 2018, and versus expectations for a reading of 98.0.Meanwhile, the index of current economic conditions rose to 114.2 from 113.3 in March, but was down from April 2018's reading of 114.9.The index of consumer expectations printed at 85.8 this month compared to 88.8 in March and 88.4 in April last year.Surveys of Consumers chief economist Richard Curtin consumer confidence "continued its sideways shuffle in early April, posting an insignificant decline following the small gain recorded last month"."Overall, the level of the sentiment index during the past 30 months was higher than any other time since 1997 to 2000, the final phase of the record 10-year expansion; a record that will be soon overtaken by the current expansion. Interestingly, the impact of the tax reform legislation on consumer confidence has all but disappeared. Spontaneous references to the tax reform program were on balance favourable in January 2018."Since then, however, unaided references declined sharply so that by early April the net balance was zero (4% favourable minus 4% unfavourable). The data do not imply that consumers were pleased or displeased with the reforms, especially the limitations on SALT deductions. The data do suggest that consumers thought that its stimulative impact on the overall economy has now run its course. What has been of increasing importance to consumers are rising nominal incomes, and low inflation, producing strong gains in inflation adjusted incomes. Unfortunately, vehicle and home buying have not benefitted from low prices, but consumers have increasingly voiced complaints about rising vehicle and home prices, and slight declines in unit sales of both markets are anticipated in 2019."Capital Economics said the decline in the measure of consumer confidence was entirely driven by weaker expectations."That comes despite the surge in stock markets over the past few months and adds to the evidence that the recent slowdown in economic growth will be sustained this year," said senior US economist Michael Pearce.