United States: Consumer confidence soars to a 16-year high in March

The Conference Board’s consumer confidence index continued to run well ahead of actual consumer spending data and jumped to 125.6 in March, confounding analysts’ expectations of a slight decrease to 114.0. The index now rests at the highest level since December 2000.

According to the Conference Board, March’s sharp increase was driven by a notable improvement in consumers’ assessments of both present and future conditions. The gain in sentiment was the fourth in the last five months. Consumers’ views of the labor market also improved markedly, with the labor differential—the difference between the percentage of respondents that state that jobs are plentiful and those that say they are hard to get—reaching a 16-year high. U.S. businesses have continued to add workers to their payrolls in recent months, while February labor data showed a rebound in wage growth.

An important caveat, however, is the survey’s cut-off date, which was on 16 March. Hence, consumers’ opinions do not reflect the political struggle in Washington to repeal the Affordable Care Act nor the recent stock market selloff.

FocusEconomics Consensus Forecast panelists expect private consumption to grow 2.6% in 2017, which is unchanged from last month’s forecast. For 2018, the panel sees private consumption increasing 2.5%.