US Michigan Consumer Sentiment Index fell to 75.7 in April

April 13 (Bloomberg) -- Confidence among U.S. consumers cooled in April from a one-year high as Americans’ assessment of their financial situation eased.

The Thomson Reuters/University of Michigan’s preliminary index of consumer sentiment dropped to 75.7 from 76.2 last month. The measure was projected to hold at 76.2, according to a median forecast in a Bloomberg News survey of economists.

Tempered optimism follows a slowdown in employment gains last month and a decline in stock prices in the last two weeks. At the same time, gasoline costs close to $4 a gallon pose a risk for consumer spending that accounts for about 70% of the economy.

“Spending is holding up somewhat well, but we don’t see much momentum,” Sean Incremona, chief economist at 4Cast Inc. in New York, said before the report.

Estimates of the 71 economists surveyed by Bloomberg ranged from 74 to 78.5. The index averaged 64.2 during the last recession. It averaged 89 in the five years before the 18-month economic slump that ended in June 2009.

The Bloomberg Consumer Comfort Index, released yesterday, held near a four-year high as more Americans reported improved finances. The index was minus 32.8 in the week ended April 8, second only to the prior week’s minus 31.4, the highest since March 2008.

Other figures today showed consumer prices rose in March at a slower pace, supporting the view of some Federal Reserve policy makers that inflation will ebb. The consumer-price index climbed 0.3 percent after a 0.4 percent gain in February, according to the Labor Department.

Current Conditions

The Michigan index of current conditions, which reflects Americans’ perceptions of their financial situation and whether it’s a good time to buy big-ticket goods like cars, declined to a four-month low of 80.6 in April from 86 a month earlier.

The gauge of consumer expectations for six months from now, which more closely projects the direction of consumer spending, climbed to 72.5 this month, the highest since September 2009, from 69.8 in March.

The labor market showed signs of cooling in March. Employers added 120,000 jobs during the month, half as many as in February, Labor Department figures showed last week. The unemployment rate fell to 8.2 percent, a three-year low, as more Americans left the labor force.

A report yesterday showed first-time applications for jobless benefits rose last week to 380,000, the highest since Jan. 28, Labor Department statistics showed.

Pump Prices

At the same time, gasoline prices have leveled off close to $4 a gallon. The average cost of a gallon was $3.90 yesterday, down from a 10-month high of $3.94 that was reached April 5, according to AAA, the nation’s largest automobile association.

Stock prices, while lower so far in April, are higher this year. The Standard & Poor’s 500 Index has gained 10 percent in 2012, providing a boost to household income.

Even with the recent pickup in consumer sentiment since late last year, it’s still limited, according to Brian Jenkins, chief financial officer at Dallas-based Dave & Buster’s Inc., which operates restaurant entertainment complexes.

“They are better than they were a couple of years ago, but it’s certainly not a robust tailwind as it relates to the consumer right now,” Jenkins said in an April 12 earnings call.

Bloomberg News

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