Reflecting a significant improvement in consumers' short-term outlook, the Conference Board released a report on Tuesday showing that its consumer confidence index increased by much more than economists had been expecting in April.
The report showed that the consumer confidence index jumped to 39.2 in April from an upwardly revised 26.9 in March. Economists had expected the index to increase to 29.7 from the 26.0 originally reported for the previous month.
Lynn Franco, Director of the Conference Board Consumer Research Center said, Consumer Confidence rose in April to its highest reading in 2009, driven primarily by a significant improvement in the short-term outlook.
While the present situation index edged up to 23.7 in April from 21.9 in March, the expectations index surged up to 49.5 from 30.2.
The sharp increase in the expectations index suggests that consumers believe the economy is nearing a bottom, Franco said. However, this index still remains well below levels associated with strong economic growth.
The notable increase by the expectations index came as those expecting conditions to improve over the sex months rose to 15.6 percent from 9.6 percent, while those expecting conditions to worsen fell to 25.3 percent from 37.8 percent.
Consumers were also considerably less pessimistic about the employment outlook. While those expecting more jobs in the months ahead rose to 13.9 percent from 7.3 percent, those expecting fewer jobs fell to 33.6 percent from 41.6 percent.
The report also showed a moderate improvement in consumers' appraisal of present-day conditions. Those claiming business conditions are good rose to 7.6 percent from 6.9 percent, while those saying conditions are bad fell to 45.7 percent from 51.0 percent.
At the same time, consumer gave a mixed assessment of the current job market. While those saying jobs are hard to get fell to 47.9 percent from 48.8 percent, those saying jobs are plentiful edged down to 4.5 percent from 4.7 percent.
In other economic news, a report from Standard and Poor's showed a slowdown in the pace of contraction in home prices in February, although home prices saw continued broad based declines.
The report showed that the S&P/Case-Shiller 20-City Composite Home Price Index fell at an annual rate of 18.6 percent in February, a modest deceleration from the 19.0 percent drop in prices that was reported for January.
Additionally, the annual rate of decline by the 10-City Composite Home Price Index slowed to 18.8 percent in February from 19.4 percent in January.
David M. Blitzer, Chairman of the Index Committee at Standard & Poor's noted, This is the first month since October 2007 where the 10 and 20-City Composites did not post a record annual decline.
However, Blitzer added, We will certainly need a few more months of data before we can determine if home prices are finally turning around.
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