The Conference Board’s Consumer Confidence Index fell in March, after improving in February. The Index is now at 59.7, down from 68 last month.
Both components of the Index showed declines. The present situation portion decreased to 57.9 from 61.4, while the expectations component dropped to 60.9 from 72.4. Economists in general were expecting the Index to hold steady at 68.
Lynn Franco, director of economic indicators at The Conference Board, said, “Consumer Confidence fell sharply in March, following February’s uptick. This month’s retreat was driven primarily by a sharp decline in expectations, although consumers were also more pessimistic in their assessment of current conditions.
“The loss of confidence, particularly expectations, mirrors the losses experienced this past December and January. The recent sequester has created uncertainty regarding the economic outlook and as a result, consumers are less confident.”
Chris G. Christopher, Jr., director of consumer economics at IHS Global Insight, said, “Consumer confidence took a beating in March. The hit to consumer confidence was driven by rising pump prices and the sequester....Rising pump prices are hard for many Americans to deal with since paychecks are smaller due to the expiry of the payroll tax cut in January.
“This is a bad report. Looking ahead, we expect consumer confidence to gain ground as the shock value of the sequester disappears. However, smaller paychecks, depressed consumer mood, and rising pump prices are not very favorable for elevated levels of discretionary spending,” Christopher added.
In the Conference Board’s March survey, consumers’ perception of the labor front — whether jobs are available — continues to be a main focus for both current conditions and expectations over the next six months.
Those surveyed who said jobs are “plentiful” fell to 9.4 percent from 10.1 last month. The pessimism was also evident in the jobs outlook six months out. Respondents who said they expect more jobs in the months ahead decreased to 12.3 percent from 16.1 percent, while those who said they expect fewer jobs six months out rose to 26.6 percent from 22.1 percent.
Corresponding with the job front expectations, the proportion of consumers who expect their incomes to rise declined to 13.7 percent from 15.8 percent.
While consumers may have turned pessimistic about their personal balance sheets, investors’ confidence suggests they’re okay with what has been perceived as a slow growth recovery.
U.S. equity markets rose Tuesday, with the major indices inching up. The S&P 500 Retailing Industry Group rose 0.6 percent, or 4.59 points, to 725.32, as the Dow Jones Industrial Average increased by 0.8 percent, or 111.90 points, to 14,559.65.
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