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Confidence shoots higher

April 28, 2021

peak in the conference board's consumer confidence index by expansion chart

Source: The Conference Board

The consumer confidence index rose sharply again in April, moving higher by 12.7 to 121.7, as the present situation component turned in its largest increase on record. The headline index has now retraced more than three-quarters of its decline during last year’s recession and already stands above the high-water marks from all but two of the expansions in the last five decades.

These numbers, then, continue to be among the best examples of the accelerated nature of this cycle. The rare cases in which confidence has been higher than it is currently (late 1960s, late 1990s, and late 2010s) have come at the tail-ends of the three longest expansions in U.S. history. That confidence is already approaching such levels roughly one year into this cycle should be taken as an indication of the substantial upside potential in the years ahead. The 2020 downturn was a supply shock rather than a traditional demand shortfall, but still elicited a policy response – overwhelmingly so – more akin to a typical recession. The exogenous shock is now fading, but the stimulus is still very much in place and is unlikely to be pared back for at least a few more years. That combination already has the economy rebounding robustly and it continues to promise much more to come going forward.

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