U.S. consumer sentiment took a surprise negative turn in early April due to a persistently grim outlook on income and jobs, a private survey released Friday showed.
A slip in economic expectations to its lowest in a year likely stemmed from consumers hearing negative information on government programs and a perception that the recovery is too slow, according to Thomson Reuters/University of Michigan's Surveys of Consumers.
"While consumers think the overall economy will continue to improve, they still hold quite negative views on their own income and job prospects," Richard Curtin, director of the surveys, said in a statement.
Consumer sentiment is seen as a proxy for consumer spending, which fuels about 70 percent of the U.S. economy.
The surveys' overall index on consumer sentiments slipped to 69.5 in early April — the lowest in five months. This was below the 73.6 reading seen at the end of March and the 75.0 median forecast of analysts polled by Reuters.
The survey's gauge of current economic conditions slipped to 80.7 in early April, the lowest since December. This was below the 82.4 in late March and 84.0 forecast by analysts.
The survey's barometer of consumer expectations fell to 62.3 in early April, the lowest since March 2009. This was below the 67.9 seen at the end of March and fell short of the 68.7 predicted by analysts.
More than one in five consumers said they had heard negative information about government programs when asked to identify news of recent economic developments, about twice as high as a month or a year ago, the latest data showed.
Asked to evaluated federal economic policies, including healthcare reform, 45 percent rated them unfavorably, up from 40 percent in March.
Consumers' weaker expectations came despite recent data showing the biggest payroll gain in three years in March and a hefty 1.6 percent rise in retail sales last month.
"Although confidence in economic policies and legislation showed signs of weakening, it is too soon to determine if the reaction will be temporary or a more lasting concern," Curtin said.
The index of consumers' 12-month economic outlook fell to 71 from 78 in March but was up from 54 a year earlier.
Consumers polled in early April expected near-term inflation to accelerate.
The survey's 1-year inflation expectation index rose to 2.9 from 2.7 percent in late March, while the five-to-10-year inflation measure held steady at 2.7 percent in early April.
