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Economic Report: Consumer sentiment jumps on lower gas prices and more optimism about the economy

The numbers: The final survey of U.S. consumer sentiment in April slipped to 65.2, but it still marked the highest reading in three months and the first increase this year. Americans felt better about falling gas prices and were more optimistic about the future.

The index registered a preliminary 65.7 earlier in the month, up from an 11-year low of 59.4 in March. The report is produced by the University of Michigan.

The index hit a pandemic peak of 88.3 in April 2021 before beginning a long slide that coincided with the surge in inflation. The increase in April was the first since the final month of 2021.

Big picture: Americans are worried about high inflation. It’s rising faster than their incomes. But they’ve been encouraged by a pullback in gasoline prices after they surged in March to a 14-year high.

The strong labor market another is another source of comfort. The unemployment rate has fallen almost to pre-pandemic levels and jobs are very easy to find. Many people are switching jobs and getting bigger pay raises in the process.

Yet Americans are likely to remain anxious until inflation falls. The Federal Reserve is also raising interest rates, making it more expensive to buy a new car or house or obtain a loan.

Key details: A gauge that measure what consumers think about their own financial situation and the current health of the economy rose to 69.4 from a preliminary 68.1.

Another measure that asks about expectations for the next six months dipped to 62.5 from an initial 64.1. But it was up sharply from 54.3 in March.

Market reaction: The Dow Jones Industrial Average
DJIA,
-0.54%

and S&P 500
SPX,
-1.01%

fell slightly in Friday trades.

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