Trade Woes Catches Up With Consumers As Sentiment Sours

Talking Points:

The preliminary figure of U. of Michigan Sentiment survey in April was 97.8, erasing two-month of gains in the index

– Inflation expectations were revised up by 0.4%

– Consumers’ shift expectations and now anticipate growth to slow with higher interest rates

– US Dollar Index sees little benefit from consumer surveys

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The preliminary results of the University of Michigan consumer confidence survey for in for April. The print missed significantly coming in at 97.8 compared to the 100.4 expectation. The April results erased gains accumulated over the last two months. U. of Michigan reported that the decline was widely shared by all age and income subgroups across all regions of the country. The report also stated, “Uncertainty surrounding the evolving trade policy has caused many small (and at times inconsistent) changes in expectations.” 29% of consumers negatively referenced trade policies in their responses to the sentiment survey.

U. of Michigan also noted that there was a substantial difference in expectations between those who mentioned trade policies and those who did not. The expectations fell a hair below last month’s level of 88.8 to 86.8. Interestingly, consumers who mentioned trade policies anticipated a 0.4% increase in the year-ahead inflation rate. Conversely, consumers who did not mention trade policies saw not uptick inflation a year-ahead. Finally, and consistently, there was a concerning expectation of rising interest rates which slowed the anticipated pace growth in the economy.

Below is a summary for the preliminary results of the
April University of Michigan Surveys:

The University of Michigan will be releasing the final survey results on April 27.

Chart 1: US Dollar Index 15-minute (April 10 – 13, 2018)

The preliminary reading from U. of Michigan has had little impact on the US Dollar Index. At the time that this was written DXY traded slightly lower at 88.80.

— Written by Dylan Jusino, DailyFX Research

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