The Conference Board’s composite Consumer Confidence Index (CCI) fell for the third consecutive month during April, and is now at a level 5.4% lower than its record-high set during the first month of the new year. The CCI dropped by a scant 0.2 point between March and April of 2000 - considerably less than the average 3.3 point decline of the previous two months -- to reach a level of 136.9 (1985=100). At this index reading, the CCI still stood 1.1% higher than during April of 1999.
Consumers’ assessment of current economic conditions fell by 1.4% between March and April, but expectations for the future (defined as six months out in this survey) improved by 0.9% after falling sharply during both February and March. The CCI sub-index for consumer’s assessment of present conditions was 2.6% higher this April than during April 1999, while the "expectations" sub-index of the CCI this April was only 0.4% lower than during the same month of 1999.
The CCIs for five of the nation’s nine regions recorded declines between March and April. The confidence measure for consumers in both the Rocky Mountain (+7.9%) and East North Central (+6.7%) regions of the country rose significantly over the month, while New England and the West South Central region registered smaller improvement. But confidence readings fell by more than 5% over the latest month in the Pacific Coast (-8.9%), East South Central (-5.9%), and West North Central (-5.5%) states. Confidence levels were higher this April than during April 1999 in 4 regions, and lower in the remaining five regions of the country. Over-the-year declines were steepest for the East South Central (-5.1%) and Pacific Coast (-4.2%) states, while confidence readings improved by more than 10% from a year ago in the West South Central (+10.3%) and West North Central (+10.1%) regions.
Special questions associated with the April confidence survey revealed that among the 5,000 households surveyed by the Conference Board, only 2.7% indicated that they had plans to buy a home (new or existing) within the upcoming six months. This was down from the revised 4.0% reading recorded during March, and dramatically lower than the 4.9% level recorded during the lower-interest-rate environment of August 1999. Purchasing plans for major appliances also fell slightly between March and April of this year. During April 2000, 27.0% of consumers surveyed indicated that they planned to buy a major appliance at some point in the upcoming six months. Major appliance buying plans peaked last August at 33.0% of households contacted by Conference Board researchers. And auto purchase plans were at their lowest level since early 1998 according to this April’s consumer survey, with only 8.2% of surveyed consumers saying that they planned to buy either a new or used vehicle between now and this upcoming October.
On balance, the April confidence survey suggests that consumers have a great deal of faith in the continued resilience of the U.S. economy despite higher interest rates and the slight erosion in stock market wealth. However, these factors have clearly begun to have an impact on consumer buying plans. In the months ahead, we’ll see if these more subdued spending plans do in fact materialize and subsequently show up in other measures of retail sales and consumer spending.
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