A preliminary survey of consumer confidence for April shows the lackluster job creation seen in March is playing into people's pessimism more than economists had expected. But a recent, tiny, decline in gasoline prices, following a dizzying climb at the beginning of the year, is at least making consumers feel better about inflation and hence, expectations for the future.

The Thomson Reuters/University of Michigan's preliminary index of consumer sentiment, the most-widely followed gauge of U.S. consumer's mood decreased to 75.7 for the most recent reading, out Friday morning. That measure is down from a peak of 76.2 at the end of last month. Economists had expected the index to remain unchanged.

While gasoline prices and uncertainty surrounding fiscal policy remain significant downside risks, we still see an upward trend in consumer sentiment and expect that it will continue to move toward pre-recession levels as the labor market improves, Cooper Hewes, an economist at Barclays Capital, noted in an email. The economics team at his bank had expected a much healthier reading of 77.5.

The index fell on decreases within the current conditions sub-component, which measures how people gauge their current economic prospects and is heavily influenced by the employment situation. The sub-component index fell to 80.6, from 86.0 in the last reading.

The sub-component that measures expectations a year down the line actually increased, likely the result of a small dip in gasoline prices during the first weeks of April that is making consumers worry less about what they'll be spending at the pump during the upcoming summer driving season. That index jumped to 72.5, from 69.8

Inflation expectations 12 months from now, which had been reported at a very high 6.3 percent last time around, were a more moderate 3.4 percent.

An unrelated release by the Labor Department also out Friday morning showed U.S. inflation is indeed declining.

On the domestic front, two forces should drive inflation down. First, even if on a downward path, the unemployment rate remains too high to allow a strong acceleration in wages. Second, even if we expect it to rebound, households' demand remains convalescent, limiting the room for increasing retail prices, Alexandra Estiot, a Paris-based economist for BNP Paribas, wrote regarding the Labor Department report.

Not as simple as it seems

While the preliminary consumer data for April seemed to follow a straight-forward pattern, with consumers reacting as expected to lower inflation and lower labor market growth, a deeper look into the data showed some interesting divergences that are, in many ways, the opposite as to what economists would expect.

Sentiment declined somewhat for survey-takers in the 35-54 age cohort, for example, but skyrocketed for survey-takers 18 through 34. That is the opposite as to what analysts would expect, given the younger generation is more affected by a weak job market while the older consumers are more likely to have accumulated assets, meaning they prefer lower inflation.

Respondents' opinions on government economic policy, a small part of the survey also moved significantly and became more polarized, in spite of the fact no significant changes in policy have been announced over the past few weeks. The percentage of survey-takers with a positive view of policy went up to 15 percent, a huge jump from the 10 percent measured in the last reading. The percentage with a negative view also went up to 47 percent, from 41 percent previously.

 Wall Street reacts

The underwhelming report had mixed effects on investors. The drop in confidence was a clear negative for equity traders, but the confirmation that consumers are experiencing lower inflation further added hopes to expectations the U.S. central bank will engage in a new round of stock market-boosting asset purchases.

The benchmark S&P 500 index of U.S. equities, which was down early in the day, dropped only a negligible amount after the reading. Around mid-day, it stood at 1,375.87, down 83 basis points.