Confidence Erodes, Wage Growth Sluggish
By Ros Krasny 15 minutes ago
U.S. consumers turned a bit more glum about the future in April as they struggled with record gasoline prices and sluggish wage growth, reports showed on Friday.
Separate reports showed Midwestern manufacturing ticking along at a faster-than-expected rate this month, and consumer spending -- and inflation -- higher in March.
Economists said the day's data did little to change the outlook for interest rates when the Federal Reserve's policy-making Open Market Committee meets on Tuesday.
The personal consumption expenditures, or PCE, index, rose 0.5 percent in March after climbing 0.3 percent in February, further evidence of price pressures in the economy. The data supported expectations the Fed will raise overnight rates by a quarter-percentage point, to 3 percent, with another increase likely in June.
The University of Michigan's closely watched measure of consumer sentiment fell in April to 87.7 from 92.6 in March.
Assessments of current conditions and future expectations both slipped on the month, and expectations are riding a four-month decline to their lowest level since March 2003.
"Consumers need some relief from high gasoline prices, mediocre job markets and volatile equity markets in order to feel more optimistic about the economy," said Steven Wood, economist at Insight Economics.
Economists caution that the link between consumer confidence and consumer spending is sometimes tenuous, with Americans spending even at times of worry. Still, many draw at least a dotted line from declining confidence to softness in consumer spending, the engine that drives two-thirds of U.S. economic activity.
U.S. markets mostly ignored the day's data, with stocks and bonds little changed.