Consumer sentiment stabilizes at end of April

Consumer sentiment appeared to stabilize toward the end of April after suffering its biggest decline ever, perhaps reflecting raised hopes among Americans that the economy will improve later in the year after the early onslaught from the coronavirus.

The final reading of the consumer-sentiment survey in April edged up to 71.8 from an initial 71, the University of Michigan said Friday.

Still, the decline in the index from March to April was the biggest ever and reflects an economy already in recession. The index had registered 89.1 in March and a nearly 15-year high of 101 in February.

The U.S. is facing its biggest economic crisis since the Great Depression nearly a century ago. More than 25 million Americans have applied for unemployments benefits in just the past month and a half.

And economists estimate the jobless rate has soared above 15% from just 3.5% a few months ago.

What happened: The stabilization in consumer sentiment mirrors the results of a similar weekly survey by Morning Consult that has left economists somewhat perplexed. The economy has gotten worse in the past few weeks — not better — and it’s far from clear that the U.S. has turned the corner in its fight to slow the coronavirus.

Americans recognize the bleak outlook for the economy right now. A portion of the sentiment survey that examines how Americans view the present has plunged 40.5 points in the past two months to 74.3.

Yet another part of the survey that gauges attitudes for the next six months has fallen just half as much since February — to 70.1 from 92.1.

The diverging results indicate consumers think the economy might start to heal later in the summer, even in the absence of any grounds to believe it’s likely to happen.

Richard Curtin, the chief economist of the sentiment survey, said the gap likely reflects “the anticipated cyclical nature of the coronavirus.” Yet he warned that confidence could plunge if the U.S. begins to reopen its economy too early and another outbreak occurs.

If so, the sentiment survey could eventually drop below its previous record low of 55.3 in 2008 during the middle of the last recession, one of the worst in modern U.S. history.

Big picture: The economy has already sunk into a deep recession. For how long and how badly it gets are still unclear. Much will depend on whether the disease fades during the summer and how quickly treatments are discovered.