US consumer confidence probably declined in April from a seven-month high, which may suggest spending is cooling, analysts said in advance of today's economic report.
A reading of 107.5 is expected for the Conference Board's consumer confidence index, based on the median of 47 forecasts in a Bloomberg News survey. That would be down from 110.2 in March, when confidence surged as Americans became convinced that the recession had ended.
Rising gasoline prices, the largest drop in stock prices in seven months, concerns about the economic recovery and violence in the Middle East gave Americans reason to feel less secure. That may have damped their willingness to buy, which matters because consumer spending accounts for two-thirds of the economy. Wal-Mart Stores Inc already projects that sales slowed for the month.
"There is going to be some pullback in spending," said Rick MacDonald, an economist at Standard & Poor's MMS in Belmont, California. "The dip in stock prices, a rise in gasoline prices, problems in the Middle East and increased concerns over the recovery, would together weigh on confidence."
The survey of about 5,000 households was conducted from April 1 through April 19.
The confidence index is still expected to be above the 7 1/2-year low of 84.9 reached in November, two months after the September terrorist attacks. The April level of confidence helps explain why spending may keep growing this year even if it doesn't lead to the surge in growth that is typical following most recessions.
"I would think consumers are going to continue hanging in there," said Ray Stone, managing director of Stone & McCarthy Research Associates in New Jersey. "I don't think we're on the cusp of consumer spending tanking."
The economy grew at a 5.8 percent annual rate in the first quarter, the fastest in more than two years and proof that the recession that began in March 2001 has ended. Growth is expected to slow to an annual rate of 3.4 percent this quarter and stay close to that pace in the second half of the year, according to the latest consensus estimate of the Blue Chip Economic Indicators survey of about 50 economists.
Higher gasoline prices are restraining optimism and spending. The average price of gasoline at the pump reached a six-month high of US$1.45 a gallon in April on concern supplies may be disrupted because of violence in the Middle East.
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