by Paul Lengemann, BullsnBears Economist
University of Michigan consumer sentiment for the US fell to 71 in April from 89.1 in March, missing market expectations of 75 by a considerable margin. The April numbers are the lowest reading since December of 2011 and the largest monthly decline ever recorded.
The poor numbers reflect the persistent Covid19 pandemic and the lack in confidence in the Trump administration’s handling of the crisis. The free-fall in confidence would have been worse were it not for the expectation that the infection and death rates from Covid19 would soon peak and allow the economy to restart. Exact numbers and dates for the restart of the economy obviously remain elusive.
The US stock market seems to take a different and more positive tack as stock indexes for all the key indexes have been positive for much of this week. Will that continue? That is impossible to predict. Forecasts of a quick and sustained economic expansion is likely to be a failed expectation, resulting in a renewed and deeper slump in confidence.
Fed Chairman Powell today noted that the economic downturn is severe and will last quite a while. What that means in concrete terms is unclear, but the widely touted expectation of 18 to 24 months makes sense. Meanwhile, the Fed has pumped another $2.3 trillion into the economy. All that liquidity should have a positive impact soon.
Chances for a serious leap in inflation seem to be of little concern right now. A jump of whatever magnitude can be handled if It were to happen. At least so the thinking goes.
Meanwhile, some 16 million people have filed for unemployment in the past three weeks, a number that is sure to be shy of the real figure since filing has been difficult for those affected. Chances are good that this number will go up substantially in the weeks ahead.
The outlook is not good.