By David Harrison 

Consumers' outlook for the U.S. economy softened slightly in April even though it remains historically high.

The University of Michigan said Friday its final index of consumer sentiment was 97.2 this month, down from 98.4 in March.

Economists surveyed by The Wall Street Journal had expected a final reading of 97.

Despite the small dip in April, the index has run at historically high levels over the past 2 1/2 years. The index has averaged 97.2 over the past 28 months, said Richard Curtin, the survey's chief economist.

"The last time consumer sentiment was as favorable for as long a period of time was during the late stages of the Clinton expansion," he said.

The April report suggests sentiment has largely recovered from a small wobble earlier this year caused by the government shutdown. Roughly 44% of respondents said they expected their financial prospects to improve in the year ahead versus 8% who expected them to worsen, the best reading since 2004, Mr. Curtin said.

The report could be a sign that the economy will maintain its robust pace of growth as the year unfolds. Earlier Friday, the Commerce Department reported gross domestic product grew at a seasonally adjusted annual rate of 3.2% in the first quarter of 2019, beating expectations.

April's sentiment report also suggests that consumer spending is poised to pick up in the months ahead from the disappointing 1.2% annual rate recorded in the first quarter. Mr. Curtin said he expects real personal-consumption expenditures will grow 2.5% in 2019.

But the report also included potential reasons for concern. Consumer inflation expectations for the year ahead remained at 2.5%, matching the lowest reading since November 2017. Inflation expectations have sagged since August of last year, when they hit 3%.

That could indicate a rebound in inflation is unlikely in the short term. Economists say inflation expectations often drive actual inflation.

Friday's GDP report showed the price index for personal-consumption expenditures, the Federal Reserve's preferred inflation gauge, rose at an annual rate of 0.6% in the first quarter, well below the 1.5% rate in the fourth quarter and well below the Fed's 2% target.

Fed officials will almost certainly discuss those inflation concerns at their policy meeting next week. Officials have started raising the possibility that persistently weak inflation could lead them to cut interest rates for the first time since the recession.

Inflation has undershot the Fed's target for most of the past seven years.

Write to David Harrison at david.harrison@wsj.com

(END) Dow Jones Newswires

April 26, 2019 11:26 ET (15:26 GMT)

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