CONSUMERS LESS CONFIDENT IN MARCH
Byline: Alison Maxwell
WASHINGTON — Consumer confidence dropped for the second consecutive month in March — a sign that recent interest rate hikes and increasing oil prices could be chilling consumers’ willingness to spend.
The Consumer Confidence Index for the month, released Tuesday by the Conference Board, dropped to 136.7, down from 140.8 in February. Confidence dipped in February for the first time since October, after hitting an all-time high of 144.7 in January. In March 1999, the index measured 134.0.
This month’s decline was caused primarily by a dip in the Expectations Index, which measures consumer confidence outlook for the next six months. That index fell to 106.2 from 114.6 in February. The Present Situation Index, which measures consumers’ immediate economic expectations, rose to 182.4 from 180.1 in February.
“While optimism about current economic conditions continues at high levels, consumers have turned cautious about prospects for the next six months,” said Lynn Franco, director of the Conference Board’s Consumer Research Center.
“Analysts are waiting to see if a further erosion in confidence triggers a slowdown in spending,” Franco said. “As for now, a moderate cutback in consumer spending is unlikely to stifle still-strong economic growth.”
The proportion of consumers expecting business conditions to worsen over the next six months jumped to 6.5 percent in March, from 4.5 percent in February. Only 14 percent said they expect business conditions to improve, down from 17.1 percent in February.
Consumers’ job outlook for the next six months was also less favorable. The proportion of consumers expecting fewer jobs to be available in the coming months rose to 11.3 percent from 9.5 percent in February. Income prospects dropped — only 24 percent of those surveyed expect an increase in their incomes, down from 25.8 percent in February.
More positively, consumers’ assessment of current conditions rose slightly. The number of respondents who said jobs are “plentiful” advanced to 52.7 percent in March, up from 51.2 percent in February.
Federal Reserve policymakers have raised interest rates five times since June in an attempt to stop inflation and cool the red-hot economy.
U.S. retail gasoline prices fell 2.1 cents to $1.508 a gallon, the first drop in 11 weeks, as OPEC met in Vienna to iron out an agreement to boost oil production. Still, gas prices are up 39 percent from a year ago, the weekly U.S. Department of Energy survey of 800 filling stations showed.