The Conference Board's Consumer Confidence Index declined for the fifth straight month in April to 86.0, down from a revised 93.9 (previously 92.9) in March, and below expectations of 87.5 in the Econoday survey of forecasters. Consumers' assessment of current business and labor market conditions fell again, while their short-term outlook for income, business, and labor market conditions experienced another sharp decline.

The Expectations Index dropped to the lowest level in almost 14 years and well below the threshold of 80 that usually signals a recession ahead.
There are no bright spots in the report.

The three expectation componentsbusiness conditions, employment prospects, and future incomeall deteriorated sharply, reflecting pervasive pessimism about the future, the report said. In addition, expectations about future income prospects turned clearly negative for the first time in five years, suggesting that concerns about the economy have now spread to consumers worrying about their own personal situations.

The Conference Board said the share of consumers expecting a recession over the next 12 months rose to a two-year high.

Average one-year inflation expectations jumped to 7 percent in April from 6.2 percent in March. Inflation remains top of mind, as consumers explicitly mentioned concerns about tariffs increasing prices and having negative impacts on the economy.

On a six-month moving average basis, purchasing plans for both homes and autos declined again. However, plans to buy big-ticket itemsincluding appliances and electronics while down in April, rose on a six-month rolling basis. Consumers' overall intentions to purchase more services in the months ahead were down, with almost all services categories affected, the Conference Board said.

If the University of Michigan survey of consumers is anything to go on, with a decline of 8 percent on the month, this will be a bleak report as consumers are fearful about the outlook. The consensus looks for a drop to 87.5 in April from 92.9 in March and 100.1 in February.

The Conference Board's confidence report surveys consumers on their assessments of the labor market, business activity, and their own financial conditions. The survey is conducted by Toluna, an online community platform. (Conference Board and Toluna)

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 confidence 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.