Jefferies' recent consumer-sentiment analysis shows a divergence within the U.S. population: while the broad index slipped, more-affluent and better-educated groups reported improvements in sentiment in recent weeks. The report cites possible links to gains in equity markets and a reduced sensitivity to gasoline costs among those cohorts.
On the aggregate level, the consumer-sentiment score fell to 88 in the latest release, down from 94 at the end of February and from 100 a year earlier. The firm says this overall decline was driven by weaker readings across multiple components of the survey, including assessments of current conditions, expectations for personal finances, perceptions of buying conditions and views on business conditions.
Among those subcomponents, current buying conditions and expected business conditions experienced the greatest deterioration. Jefferies attributes that pressure primarily to elevated energy prices and the prevailing geopolitical climate.
Counterbalancing the broader softness, consumers holding a Master’s degree or higher showed a recovery of about 7 points from the March low, bringing their sentiment back to levels seen in late February. Higher-income consumers also registered improvement, with sentiment rising roughly 5 points from the March trough. Jefferies suggests these gains for higher-income households may reflect improved conditions in securities markets.
On labor-market measures, respondents reported improved hiring conditions. The unemployment index, which had previously moved above a neutral threshold, has since retreated below that threshold, indicating a modest improvement in labor-market perceptions.
Younger cohorts showed notable month-to-month gains in labor-market experience: the 18-24 and 25-34 age groups both reported meaningful improvements in hiring conditions over the past month. Jefferies also notes broad-based improvement across education and regional cohorts.
Finally, the proportion of workers reporting a loss of pay stabilized at about 12 percent. That level represents an improvement relative to the post-holiday period and aligns with readings seen in early December.
Key takeaways
- Aggregate consumer sentiment declined to 88, down from 94 at end-February and 100 a year earlier.
- Higher-income and Master’s-or-higher education cohorts saw recent sentiment gains, potentially linked to stock-market improvements and lower sensitivity to gasoline prices.
- Labor-market perceptions improved, with the unemployment index moving back below neutral and pay-loss reports stabilizing near 12 percent.
Sectors affected: consumer discretionary and financial markets may be sensitive to shifts in higher-income sentiment; energy sector dynamics are cited as a pressure point on buying and business expectations; labor-market improvements have implications for employment-sensitive services and retail demand.