University of Michigan consumer sentiment index slips to 3-month low on trade-war fears

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Shoppers exit as a line forms outside the Fifth Ave. Abercrombie & Fitch store.

The numbers: The University of Michigan’s consumer sentiment index in April fell to a reading of 97.8, down from 101.4 in March. Economists polled by MarketWatch expected a reading of 101.

The index of current economic conditions fell to 115 from 121.2, while the expectations index declined to 86.8 from 88.8.

What happened: The decline wasn’t big but was shared across most age and income groups, the University of Michigan said. The moves made by President Trump on trade—imposing tariffs on steel and aluminum and identifying possible levies on Chinese goods—were mentioned spontaneously by nearly a third of respondents, nearly all negatively. For those who were negative on Trump’s trade moves, the expectations index was 64.2, compared with 93.9 for those who didn’t mention it.

Another worry was rising interest rates, as the Federal Reserve lifted interest rates in March and said it was planning at least two more increases this year.

The big picture: The reading certainly wasn’t terrible, and with low unemployment, tax cuts and signs of rising wages, the U.S. consumer is in solid shape at the moment. The University of Michigan said the data are consistent with a growth rate of 2.7% in consumption from mid-2018 to mid-2019.

What they’re saying: “Despite today’s decline, consumer sentiment remains relatively high, and is consistent with strong consumption spending in the coming months,” said Pooja Sriram of Barclays.

Market reaction: Stocks faltered slightly after the below-forecast data. The Dow Jones Industrial Average












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 and the S&P 500 index












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 turned lower after the sentiment and job-openings reports.

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