NEW YORK – U.S. consumer confidence (search) deteriorated in April to its lowest in five months as higher gasoline prices (search) made Americans uncertain about their economic prospects, The Conference Board said Tuesday.
As gasoline costs skyrocketed along with soaring crude oil prices (search), The Conference Board said its gauge of consumer sentiment dropped to 97.7 from a revised 103.0 in March, roughly in line with Wall Street forecasts.
"Consumers do not anticipate an improvement in economic growth (or) in their incomes," said Lynn Franco, Director of The Conference Board's (search) Consumer Research Center.
Consumer spending is the backbone of the U.S. economy, accounting for two-thirds of activity, so worsening confidence is tracked as a possible precursor to softer growth.
In recent years, however, the correlation between confidence and actual retail sales has weakened, with consumers purchasing cars and homes even as they tell surveys that things are getting worse.
Indeed, the data showed an increase in buying intentions for items like major appliances.
A separate report showed a striking 12.2 percent jump in new home sales, to a record level in March.
The private research group's expectations index measure declined to 87.2, its lowest in nearly two years, from 93.7. The present situation reading declined to 113.6 from 117.0 and the six-month outlook worsened for the fourth straight month.
"The confidence numbers ... in all likelihood reflect the fact that oil prices, and hence gasoline prices, have been edging up and are quite high," said Rick Egelton, deputy chief economist at BMO Financial.
News on the labor market was mixed. The proportion of consumers saying jobs were "hard to get" eased, but so did the number of those who thought jobs would become more plentiful in coming months.
The U.S. economy has been growing robustly for about two years but the expansion has yet to fuel the sort of robust hiring seen in past recoveries, puzzling economists.
Some point to reticence following the late 1990s stock market bubble, while others suggest strong productivity growth has allowed firms to do the same amount of work with fewer workers.