Consumer Confidence Up on Longer-Term Expectations
The Conference Board, New York, reported its monthly Consumer Confidence Index rebounded in March from a disappointing February.
The Index rose by 2.2 points to 96.2, up from 94.0 in February. The Present Situation Index declined moderately from 115.0 to 113.5, while the Expectations Index increased from 79.9 to 84.7 in March.
“Consumers’ assessment of current conditions posted a moderate decline, while expectations regarding the short-term turned more favorable as last month’s turmoil in the financial markets appears to have abated,” said Lynn Franco, director of economic indicators with The Conference Board. “On balance, consumers do not foresee the economy gaining any significant momentum in the near-term, nor do they see it worsening.”
The report said consumers’ appraisal of current conditions eased in March. Those saying business conditions were “good” decreased from 26.5 percent to 24.9 percent. However, those saying business conditions are “bad” edged down from 19.0 percent to 18.8 percent. Consumers’ appraisal of the labor market was mixed. Those claiming jobs are “plentiful” increased from 22.8 percent to 25.4 percent, while those claiming jobs are “hard to get” also rose to 26.6 percent from 23.6 percent.
Consumers were more optimistic about the short-term outlook than in February. The percentage of consumers expecting business conditions to improve over the next six months increased moderately from 14.5 percent to 15.0 percent, while those expecting business conditions to worsen decreased from 11.6 percent to 9.2 percent.
Consumers’ outlook for the labor market was also more favorable. Those anticipating more jobs in the months ahead increased slightly from 12.2 percent to 12.9 percent, while those anticipating fewer jobs decreased from 17.7 percent to 16.3 percent. The proportion of consumers expecting their incomes to increase declined moderately from 17.7 percent to 17.2 percent, while the proportion expecting a reduction in income edged up from 11.6 percent to 11.8 percent.
Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said the headline looked better than the underlying details, however, as consumers remained frustrated by sluggish income growth.
“All of the increase in the Consumer Confidence Index during March came from the expectations series, which measures how consumers feel business conditions, employment prospects and income growth will look six months from now,” Vitner said. “The rebound in the stock market helped reverse the growing proportion of consumers expecting business conditions to worsen over the next six months.”
