By Lucia Mutikani
WASHINGTON, April 28 (Reuters) - U.S. consumer confidence unexpectedly edged higher in April amid a rally in share prices following a ceasefire in the war with Iran and improved perceptions of the labor market, helping to ease households' financial worries for now.
Despite the rise in confidence to a four-month high, the survey from the Conference Board on Tuesday showed higher gasoline prices stemming from the U.S.-Israeli conflict with Iran remained a source of concern for consumers.
Fewer planned vacations over the next six months and the share of those intending to drive to their holiday destinations was the lowest since April 2020, when the nation was in the throes of the first wave of the COVID-19 pandemic.
The two-week ceasefire, extended indefinitely by President Donald Trump last week, contributed to boosting the stock market. Economists shrugged off the improvement as temporary, noting that confidence remained well below levels seen in January 2025, when Trump returned to the White House and imposed sweeping tariffs on imports. They also expected the Middle East conflict, which has disrupted the flow of goods, beyond oil, to undercut the labor market at some point this year.
"We see little reason to expect a sharp rebound in consumer attitudes on the horizon," said Oren Klachkin, financial markets economist at Nationwide Financial. "A reassuring labor market will offer only modest comfort in the face of high energy prices, which will modestly seep into other parts of the inflation basket."
The Conference Board said its consumer confidence index climbed 0.6 point to 92.8 this month. Economists polled by Reuters had forecast the index easing to 89.0. The preliminary results of the survey were collected between April 1 and April 22. It was in stark contrast with the University of Michigan's Surveys of Consumers, which last week showed its Consumer Sentiment Index slumping to a record low in April.
"The University of Michigan survey is more sensitive to inflation perceptions while questions in the Conference Board survey can be more focused on the labor market," said Gisela Young, an economist at Citigroup.
Consumers identifying as Republican remained the most optimistic, while confidence fell among Independents and improved slightly among Democrats. Conference Board Chief Economist Dana Peterson noted that "consumers' write-in responses on factors affecting the economy continued to skew towards pessimism in April."
Consumers' median 12-month inflation expectations eased to a still-high 5.1% this month from 5.2% in March. Federal Reserve officials started a two-day policy meeting on Tuesday and were expected to leave the U.S. central bank's benchmark overnight interest rate in the 3.50%-3.75% range on Wednesday.
Stocks on Wall Street were mixed. The dollar was little changed against a basket of currencies. U.S. Treasury yields were higher.
TAX REFUNDS OFFERING A CUSHION
Economists say large tax refunds this year have provided a cushion from higher gasoline prices. The national average retail price is above $4 a gallon.
"High-frequency indicators suggest that discretionary spending has held up relatively well during the energy shock so far, although we expect that to change soon, now that the temporary lift from a bumper round of individual tax refunds is starting to fade," said Oliver Allen, senior U.S. economist atPantheon Macroeconomics.
The share of consumers planning to buy a motor vehicle over the next six months was the highest in nearly 1-1/2 years. More hoped to buy a house, likely encouraged by a moderation in house price growth and lower mortgage rates relative to last year.
A separate report from the Federal Housing Finance Agency showed single-family house prices increased 1.7% in the 12 months through February after climbing 1.8% in January.
Even as more consumers are planning home purchases, they are less enthusiastic about buying household appliances, including television sets, refrigerators and washing machines. This is likely a function of higher prices, also from tariffs.
Vacation was not in the cards for many, with the share dropping to a 12-month low. Views on the labor market were encouraging this month. The share of consumers perceiving employment as "hard to get" dropped while the proportion saying jobs were "plentiful" was little changed.
The survey's so-called labor market differential, derived from data on respondents' views on whether jobs are plentiful or hard to get, rose to 7.5% from 6.1% in March.
This measure correlates to the unemployment rate in the Labor Department's monthly employment report. The unemployment rate eased to 4.3% in March from 4.4% in February. Still, economists expected the labor market to soften this year.
"The U.S.-Iran war may weaken the labor market by reducing hiring by firms, as they have become more uncertain about the economic outlook and future price of oil, which is a key input of production for many," said Grace Zwemmer, a U.S. economist at Oxford Economics.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci )
