NEW YORK – Underpinning hopes the Federal Reserve will cut interest rates again at its May 15 policy meeting, the Conference Board, a New York-based private research group, said its broad gauge of consumer attitudes slid sharply to 109.2 in April from a downwardly-revised March reading of 116.9, its sixth tumble in seven months.
Consensus forecasts were for a fall to 112.0.
The economic outlook for the next six months, which helped to boost the index in March, fell to 78.2 in April from a downwardly-revised 83.1 in March, suggesting that 2.0 percentage points worth of interest rate cuts from the Fed so far this year had not yet reversed growing consumer pessimism. The present situation index tumbled nearly 12 points to 155.6 from an upwardly-revised 167.5 in the prior month.
"Deteriorating business conditions and a less favorable job market are the two critical reasons for the latest decline in confidence. It's clear that consumers have begun to worry about employment trends and these concerns are gnawing away at consumer confidence," said Lynn Franco, director of the Conference Board's Consumer Research Center.
The Conference Board index, based on a monthly survey of some 5,000 U.S. households, is considered a key indicator because consumer spending accounts for about two-thirds of the nation's economic activity. The index compares results to its base year, 1985, when it stood at 100.
The April drop returned consumer confidence to the same level it was in February, reflecting increasing pessimism about current and future business conditions. Analysts were expecting a decline, but only to 114.
The Federal Reserve has cut interest rates four times this year -- most recently last week -- in an effort to reinvigorate the struggling U.S. economy.
Analysts believe Fed officials clearly had investors in mind in the timing of last week's cut, hoping to bolster consumer confidence, which has been sagging as Americans watched trillions of dollars of paper wealth evaporate over the past year.