Consumer Confidence Inches Down in March

The Conference Board's Consumer Confidence Index® inched down in March. The index fell to 104.7 this month from February's downwardly revised 104.8. This month's reading was lower than expected, falling short of the 106.9 forecast.

The Present Situation Index, which is based on consumers' assessment of current business and labor market conditions, rose to 151.0 in March from 147.6 in February. Meanwhile, the Expectations Index, which is based on consumers' short-term outlook for income, business, and labor market conditions, fell to 73.8 in March from 76.3 in February. Note that a level of 80 or below for the Expectations Index historically signals a recession within the next year.

“Consumers’ assessment of the present situation improved in March, but they also became more pessimistic about the future,” said Dana M. Peterson, Chief Economist at The Conference Board. “Confidence rose among consumers aged 55 and over but deteriorated for those under 55. Separately, consumers in the $50,000-$99,999 income group reported lower confidence in March, while confidence improved slightly in all other income groups. However, over the last six months, confidence has been moving sideways with no real trend to the upside or downside either by income or age group.”

Peterson added: “Consumers remained concerned with elevated price levels, which predominated write-in responses. March’s write-in responses showed an uptick in concerns about food and gas prices, but in general complaints about gas prices have been trending downward. Indeed, average 12-month inflation expectations came in at 5.3 percent—barely changed from February’s four-year low of 5.2 percent. Recession fears continued to trend downward both in write-in responses and as measured by consumers’ Perceived Likelihood of a US Recession over the Next 12 Months. Meanwhile, consumers expressed more concern about the US political environment compared to prior months.”

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Background on the Consumer Confidence Index

The Conference Board Consumer Confidence Index measures the consumers attitudes and confidence in the economy, business conditions, and labor market, with higher readings indicating higher optimism. The general assumption is that when consumers are more optimistic they will spend more and stimulate economic growth. However, if consumers are pessimistic then spending will decline and the economy may slow down. The index is based on a 5 question survey, with 2 questions related to present conditions and 3 questions related to future expectations. The survey began in 1967 and was conducted every two months but changed to monthly reporting in 1977, which is where our data begins.