U.S. Conference Board's consumer sentiment index falls sharply in April

The U.S. Conference Board's index of consumer confidence dropped further in April to 86.9, after a sharp fall in March. Today’s is the lowest reading since mid-2014. The fall was quite expected given the adverse effects of social distancing measures on economic activity and employment being witnessed currently.

Thus, it was not unexpected that the fall in sentiment was mainly driven by the Present Situations index, which dropped 90 points, to 76.4, the largest fall ever. Meanwhile, the expectations index rose 7 points to 93.8, suggesting some rebound in consumers' assessments of economic conditions in the near future.

“In our view, some of this optimism is likely prompted by expectations that stay-at-home measures could be eased soon, allowing for a gradual re-opening of the economy”, said Barclays in a research report.

However, consumers’ assessments of their near-term financial prospects continue to be less optimistic, which might mean less support from consumption during the rebound.

“Overall, we do not take much positive signal from this move in the Expectations index, as elevated uncertainty about the effects of COVID-19 on economic conditions is likely to lead to fluctuations in the near term”, added Barclays.