An increase in consumer confidence gives some hope for an economy characterized by anemic consumer spending and a decrease in housing activity in April, according to economic reports released today.
Consumer confidence rose to 74.3, a three-month high in April, according to the Thomson Reuters/University of Michigan Consumer Sentiment Index released today. The boost is attributed to gains in private sector jobs and a decline in gas prices, but confidence remains well below pre-Recession levels.
Consumer confidence is linked to spending, which rose a scant 0.4 percent in April, while disposable income rose by 0.3 percent in April. Inflation eroded income gains, the Bureau of Economic Analysis reported today.
The housing market remains sluggish as indicated by the number of housing contracts signed in April. The month’s Pending Home Sales Index dropped 11.6 percent to 81.9 in April, the National Association of Realtors reported today.
“The pullback in contract signings is disappointing and implies a slower than expected market recovery in upcoming months,” said Lawrence Yun, NAR chief economist. “The economy hit a soft patch in April from sharply rising oil prices, widespread severe weather with the heaviest precipitation in 20 years, and a sudden rise in unemployment claims.”
Tight credit is a key long-term factor holding back the housing market, said Yun, who predicts a sluggish and uneven recovery.