The final University of Michigan consumer sentiment index is unrevised at 63.5 in April after 62.0 in March. The reading matches the consensus in an Econoday survey. Consumer sentiment remains gloomy as consumers continue to face inflation and an uncertain economic outlook.

The index for current conditions was revised down slightly to a final 68.2 in April but remains above 66.3 in March. The index for consumer expectations was revised narrowly higher to a final 60.5 in April, a little above 59.2 in March. Consumer expectations account for about 60 percent of the total sentiment index.

The 1-year inflation expectations measure rests at 4.6 percent in April a full percentage point higher than the 3.6 percent in March and the highest since 4.9 percent in November 2022. The jump is mostly due to higher gasoline prices. The 5-year inflation expectations measure in April is 3.0 percent, a tenth above the 2.9 percent in the December 2022-March 2023 period. The reading remains consistent with medium term expectations of the past year or so that have remained generally steady. These readings point to Fed policymakers keeping the view that the work is not yet done to tame inflation, but that their efforts to bring inflation back to the 2 percent target have not lost credibility.

Consumer sentiment is expected to end April at 63.5, above March's 62.0 and unchanged from April's mid-month flash.

The University of Michigan's Consumer Survey Center questions households each month on their assessment of current conditions and expectations of future conditions. Preliminary estimates for a month are released at mid-month and are based on about 420 respondents. Final estimates are released near the end of the month and are based on about 600 respondents.

The pattern in consumer attitudes and spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

This balance was achieved through much of the nineties and, in large part because of this, investors in the stock and bond markets enjoyed huge gains. It was during the late nineties that the consumer sentiment index hit its historic peak, reaching levels that were never matched during the subsequent 2001 to 2007 expansion nor during the long expansion following the Great Recession.

Consumer spending accounts for more than two-thirds of the economy, so the markets are always dying to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. With this in mind, it's easy to see how this index of consumer attitudes gives insight to the direction of the economy. Just note that changes in consumer confidence and retail sales don't move in tandem month by month.