NEW YORK – U.S. consumer sentiment fell in April as a sluggish stock market and conflict in the Mideast dented Americans' assessment of current conditions and the outlook for the future even as the economy recovered.
The University of Michigan's final consumer sentiment index for April fell more than expected to 93.0 from 95.7 in March. Forecasts were for a reading of 94.5 after a preliminary mid-month reading of 94.4. The data are released directly to market subscribers and were obtained by Reuters on Friday.
The decline could foreshadow a pullback in the robust pace of consumer spending, which underpins two-thirds of the U.S. economy. Analysts don't expect spending to surge in coming months because demand held up strongly throughout the recession in 2001 and during the first three months of this year.
"The events in the Mideast, which were rather frightful, have had an impact on people's attitudes about the future," said Kevin Logan, chief market economist at Dresdner Kleinwort Wasserstein. "The stock market has been pretty soft for the last month or so. As people see that earnings are coming in rather poorly and stocks decline, it effects their expectations about their future finances."
The current conditions index, which tracks consumers' views about their present financial situation, fell to 99.2 from 100.4 in March. The preliminary reading was 100.9. And the expectations index, which measures attitudes about the 12 months ahead, fell to 89.1 from 92.7 in March. The preliminary reading was 90.2.
Treasuries were lifted slightly after the report was released on expectations the Federal Reserve will be patient before raising interest rates, while stocks trimmed earlier gains. The dollar extended losses against other major currencies after the data were released.
The Michigan sentiment survey is based on telephone interviews with roughly 500 Americans across the country on personal finances, business conditions and buying conditions. It rounds out a preliminary series released mid-month.