US Consumer Confidence Hits 9-Month Low

Facts

• According to a Conference Board survey released Tuesday, US consumer confidence dropped to a nine-month low in April as worries about the future mounted, further heightening the risk that the economy could fall into recession this year.¹
• With the third decline in the past four months, the board's "expectations index" fell to 68.1 this month from March's 74. A reading under 80 frequently foretells a recession in the coming year.²
• Regarding business, 18.8% of consumers said conditions were "good" — unchanged from last month — while 18.1% said business conditions were "bad," down from 19.3%. Meanwhile, 48.4% said jobs were "plentiful," up slightly from 47.9%, and 11.1% said jobs were "hard to get," down from 11.4% last month.³
• The decline in confidence, shown particularly among those under 55 years of age and households making $50K annually or more, includes just 41% of Americans planning to buy household appliances over the next six months, down from 44.8% in March.¹
• Meanwhile, consumer spending, which makes up about 70% of US economic activity, has remained strong despite the Federal Reserve raising interest rates nine straight times since March of last year in an effort to cool inflation.⁴
• This also comes as the US Housing Price Index rose by 0.5% despite expectations that it would fall by 0.2%. Recent data has created a complex picture for the Fed's intended key announcement in the coming days.⁵

Sources: ¹Reuters, ²ABC News, ³Business Insider, ⁴Washington Post, and ⁵Forbes.

Narratives

• Republican narrative, as provided by Wall Street Journal. While no president can receive all the credit for a good or bad economy, the American people are rightfully pessimistic about how Joe Biden has cared for their pocketbooks. The proof is in the pudding with Inflation — particularly gas prices — still up and wages not keeping pace, and the US debt increasing by a whopping $8 trillion. While slow, small improvements have been made recently, 80% of Americans still think the economy is doing poorly, and more than half believe it will worsen over the next year.
• Democratic narrative, as provided by Dallas News. Despite Republican data cherry-picking, the US economy has improved greatly since Biden took office. From his inauguration through July 2022, the US added over 500K jobs per month. The unemployment rate has also dropped from 6.3% to 3.5% since he assumed office, including significant drops for Black and Hispanic Americans. Though the inflation battle is still ongoing and the Gross Domestic Product decline is real, the US under the Biden admin. has yet to see a recession and the projections are growing more positive by the day.

Predictions

Will the US enter a recession before the following dates?

The aggregate of 328 Metaculus community forecasters was 20% on Apr 28, 2023.

MetaculusCategories: Economy – US on {{qctrl.question.created_time | dateStr}}