Consumer confidence drops to 21-month low due to worries about food and gas prices

Consumer confidence tends to signal whether the economy is getting better or worse. Confidence has retreated since the start of the year and sits well below the pre-pandemic high.

“Elevated price levels, especially for food and gas, dominated consumer’s concerns, with politics and global conflicts as distant runners-up,” said Dana Peterson, chief economist at the board.

Economists polled by the Wall Street Journal had forecast the index to register 103.5 in March.

Key details: A measure that looks at how consumers feel about the economy right now dropped to five-month low of 142.9.

A confidence gauge that looks ahead six months fell even more sharply to 66.4 in April from 74.0 in the prior month. It’s the third straight reading below 80.

Historically readings below 80 in the expectations index signal a forthcoming recession. Yet the index has dipped below that mark repeatedly since 2022 even though the economy has kept expanding at an above-average speed.

Big picture: The economy is fine by most measures, but still-high inflation and high interest rates have sapped the confidence of consumers.

Buying groceries or going out to eat is expensive and gas prices have risen lately as well. Consumers are also cutting back on purchases of big-ticket items because of high borrowing costs.

A new worry is a softening labor market. Americans say it’s getting harder to find a job.

Looking ahead: “Confidence retreated further in April, reaching its lowest level since July 2022 as consumers became less positive about the current labor market situation, and more concerned about future business conditions, job availability, and income,” Peterson said.

Market reaction: The Dow Jones Industrial Average DJIA, -1.49% and the S&P 500 SPX, -1.57% fell slightly in Tuesday trades.