New York — The Consumer Confidence Index fell more than expected in March, and while consumers are still bubblier than they were at the beginning of the new millennium, there are warning signs ahead.
The Index, based on a survey by The Conference Board, fell to 102.4 from 104.4 last month, the second month in a row that it has declined. Economists and Wall Street analysts expected the Index to dip to 103. The Index is the lowest since November, when it was 92.6.
“Consumers are still quite confident despite recent increases in unemployment claims and rising prices at the gas pump,” said Lynn Franco, director of The Conference Board’s Consumer Research Center, in a statement.
The Present Index also inched downward, to 115.6 from 116.8. Perhaps more important is the Expectations Index, the component that measures consumers’ outlook for the next six months, which fell to 93.7 from 96.1 in February.
Although consumers who anticipate business conditions to improve over the next six months increased to 19.2 percent from 17.9 percent, those expecting the business outlook to worsen also gained ground, to 8.2 percent from 7.8 percent.
As for the present, consumers saying business conditions are “good” inched up to 25.8 percent from 24.6 percent. But those polled saying that conditions were “bad” also increased, to 16 percent from 15.7 percent. The employment picture was mixed, with the percentage of consumers saying that jobs are hard to get climbing to 23.8 percent from 22.4 percent. Those who said jobs were “plentiful” improved slightly, to 21.3 percent from 21.1 percent.
The outlook for the labor market also was mixed, with those expecting jobs to become available in the coming months essentially flat at 15.1 percent. Those expecting fewer jobs slid to 15.8 percent from 16.5 percent. In addition, the proportion of consumers anticipating their incomes to improve in the next six months edged down, to 16.7 percent from 18.7 percent last month.
Franco added that consumers’ overall assessment of current economic conditions remains favorable and their short-term outlook suggests little change in the months ahead. “In fact, expectations have lost ground, consumers anticipate the job market will continue to improve, and easing employment concerns should help keep spending on track,” she noted.
However, the Conference Board’s index wasn’t the only consumer gauge that posted decreases this month. UBS economist Maury N. Harris, in a daily research note, noted that two consumer measures already released for March — from the University of Michigan and the UBS/Gallup surveys — both “slipped to four-month lows.” Harris noted that the latest run-up in gasoline prices likely added to the subdued confidence numbers.
Retailers also probably shouldn’t be looking forward to early tax refunds to boost retail sales. “Refunds are providing less fuel for households as spring finally begins,” Harris wrote. He noted that the UBS/Gallup March survey indicated that “40 percent of respondents planned to put their refunds into savings, stocks or bonds.”
David A. Rosenberg, Merrill Lynch’s chief North American economist, cited both employment concerns and soaring gasoline prices as issues dampening consumer confidence. The decline, he wrote, was concentrated in the expectations component, suggesting that consumers fear that high energy prices will slow economic activity. The jump at the pump, to around $2.15 a gallon, is running nearly 10 percent over February levels.