Americans regained some confidence lost ahead of the "sequester" budget cuts, after predictions of doom were seen as overblown, according to the latest IBD/TIPP Economic Optimism Index.
April's sentiment gauge rose to 46.2 from 42.2 a month earlier, as the automatic spending cuts to defense and other discretionary cuts were just taking effect. The reading is back near February's 47.3.
But sentiment is still negative and has been for six consecutive months. Readings below 50 indicate pessimism.
"We kind of bounced back to the presequester level as people found out that the sky hasn't fallen yet," said Raghavan Mayur, president of TIPP, a unit of TechnoMetrica Market Intelligence.
All of the index's components rose, and virtually all demographic groups saw improvement. The six-month economic outlook climbed 8.3 points to 47.1 and bounced back from a 1-1/2-year low.
The personal financial outlook edged up 0.7 point to 52.9, and confidence in federal economic policies rose 3 points off a 15-month low to 38.5.
Economic sentiment recovered just as the IBD/TIPP Presidential Leadership Index found that support for President Obama tumbled to a 16-month low over fallout from the sequester battles.
Leading up to the March 1 sequester start date, the White House warned of dire consequences ranging from severe airport delays to reduced meat inspections.
The administration has since acknowledged some of the worst effects may not materialize for several months, and Congress has allowed more flexibility to shift funds between programs, especially for the Pentagon.
Consumers Still Spend
Despite the sequester, payroll tax hikes and year-end fears of a fiscal cliff hurting confidence in recent months, consumers are upbeat enough to keep buying new cars.
General Motors (GM), Ford (F) and Chrysler on Tuesday reported their best March U.S. sales in five years.
Market research firm Edmunds.com raised its 2013 U.S. sales forecast to 15.5 million from 15 million, suggesting the robust housing and stock market rallies are lifting moods.
"Car shoppers seem unfazed by fiscal issues in the news," said Lacey Plache, chief economist at Edmunds.com, in a statement. "Even though consumer confidence has been up and down so far this year, there are 'wealth effects' that are making Americans feel comfortable finally buying the new cars they've been waiting for."
IBD/TIPP polled 915 adult Americans March 25-30.