Dive Brief:

• Confidence among consumers unexpectedly inched up this month as their view of the job market improved compared with March, the Conference Board said Tuesday.
• When asked about the labor market, 19.8% said jobs were “hard to get” compared with 21.3% in March, while 16.1% anticipated a greater availability of jobs compared with 15.4.% last month. Overall, the consumer confidence index rose 0.6 percentage points to 92.8, the Conference Board said.
• Although assessments of current and expected business conditions dipped, “this was offset by modest improvements in consumers’ perceptions of the labor market, both current and expected, as well as income expectations,” Conference Board Chief Economist Dana Peterson said in a statement.

Dive Insight:

The brighter outlook toward the labor market and future availability of jobs bolsters the argument among Federal Reserve officials opposing a cut to the federal funds rate at the end of a two-day policy meeting on Wednesday.

Prior to the Iran war and a surge in oil prices, weakness in the labor market prompted some Fed officials to favor reducing borrowing costs to avert a rise in unemployment.

The threat of a war-induced jump in price pressures and signs of firming in the labor market have quieted the call for lower interest rates.

Traders in interest rate futures believe the central bank on Wednesday will keep the federal funds rate at a range between 3.5% and 3.7%, according to the CME Group’s FedWatch tool. They see 79.7% odds that there will be no change in the benchmark rate this year.

The improvement in consumer sentiment as measured by the Conference Board contradicts some negative measures of the mood among U.S. households.

A record high share of Americans (55%) say they face rising challenges maintaining their standard of living because of a worsening financial situation, Gallup said Tuesday. Last year 53% said their finances were worsening, while in 2024 the proportion was 47%, Gallup said.

Also, the University of Michigan this month found that consumer sentiment sagged to a record low in data originating in 1978 as the Iran war pushed up the price of gasoline.

The average price for a gallon of gasoline has surged about 40% since U.S. and Israeli warplanes launched strikes against Iran on Feb. 28 — from $2.98 to $4.18 on Tuesday, according to AAA.

In turn, consumer expectations for inflation in 12 months jumped 0.9 percentage point to 4.7%, the university said Friday.

Consumers have not reduced spending. Rocketing gasoline prices pushed up total outlays for gas and overall retail sales by 1.7% last month after a 0.7% increase in February, according to the Census Bureau. Excluding spending on gas, retail sales rose 0.6% last month.

At the same time, “consumers’ write-in responses on factors affecting the economy continued to skew towards pessimism in April,” the Conference Board said, adding “consumers remained wary.”

“Comments about prices, oil and gas, and war increased in frequency compared to March — a likely signal of consumers’ underlying worries about how the war in the Middle East will impact their pockets,” according to the Conference Board.

The two-week ceasefire with Iran and a rebound in equities during the April 1 to April 22 survey period probably helped ease concerns among consumers about financial trends, the Conference Board said, while noting that expectations for inflation in 12 months remained “elevated.”