Consumer confidence showed resilience in March, although concerns about business and labor conditions lingered.
The Conference Board Consumer Confidence Index rose to 52.5 from a revised 46.4 in February. Both of its components showed improvement, with the Present Situation Index climbing to 26 from 21.7 last month and the Expectations Index growing to 70.2 from 62.9. But the overall March reading was far below 90, the level many consider a healthy consumer confidence level, and the 100 baseline level established in 1985.
“Despite this month’s increase, consumers continue to express concern about current business and labor market conditions,” said Lynn Franco, director of The Conference Board Consumer Research Center. “And their outlook for the next six months is still rather pessimistic. Overall, consumer confidence levels have not changed significantly since last spring.”
Respondents in the latest survey who said current conditions were “bad” fell to 42.8 percent from 45.1 percent. They were also less pessimistic about the labor market, with those saying that jobs were “hard to get” falling to 45.8 percent from 47.3 percent.
Consumers’ short-term outlook saw a slight uptick, with those anticipating conditions will worsen over the next six months declining to 13.9 percent from 15.9 percent.
Looking ahead six months out, those who said they expected fewer jobs fell to 21.6 percent from 24.7 percent. Respondents who said they anticipated more jobs to be available rose to 14.6 percent from 13.2 percent.
“The expectations component, which tends to track trends in real consumer spending better than other components, rose in March,” said Maury Harris, economist at UBS. “However, it remains relatively weak, in contrast to the recent pattern in spending.”
Harris said Monday’s “personal income and spending report showed real consumer spending through February is tracking at about a 3.1 percent annual rate” for the first quarter, “well above” the 2 percent pace his firm had factored into its 2.5 percent real gross domestic product growth forecast for the quarter.
The S&P Retail Index moved higher Tuesday morning in reaction to the consumer confidence report, but finished the session up just 0.1 percent at 453.53. The Dow Jones Industrial Average was also up 0.1 percent, to 10,907.42, while the S&P 500 was flat at 1,173.27. In Europe, London’s FTSE 100 was down 0.7 percent to 5,672.32, while the CAC 40 gave up 0.3 percent in Paris to close at 3,987.41. Asian markets advanced, led by a 1 percent pickup by Tokyo’s Nikkei 225 to 11,097.14