Consumer Confidence was released this morning, highlighting serious concerns for the strength of this consumer-led economy.
The Consumer Confidence report was pessimistic across the board. Consumer Confidence fell for the third consecutive month to 97.0, the lowest level in nearly two years, from a downwardly revised 103.1 in March. The Present Situation Index fell from 146.8 to 142.9 but remains relatively elevated. More importantly, the Future Expectations Index fell to 66.4 from 74, which does not bode well for the coming months.
Consumers are increasingly feeling inflation’s pinch with elevated food and gas prices dominating their concerns. More than 80% of those surveyed plan to reduce spending to save money with the top three categories being food away from home, clothing and fashion items, and entertainment away from home. Consumers have spent resiliently in the face of rising prices thus far, but if they are about to tighten their purse strings and reduce spending meaningfully it will be hard for this economy to maintain growth.
To make matters worse, the Chicago PMI, which is considered a regional view of the national economy, came in far below forecast at 37.9 from 41.4 last month. This is yet another economic indicator that briefly showed improvement in the fourth quarter of last year but has since fallen dramatically and is now at levels that have historically corresponded with recessions.
Today’s Consumer Confidence data and Chicago PMI release call into question how long the surprisingly resilient consumer and vulnerable manufacturing sector can continue chugging along.