United States: Consumer confidence steeply declines in March as present situation sentiment falls from near 20-year high
The Conference Board’s monthly consumer confidence index fell from 131.4 in February to 124.1 in March, markedly underwhelming market expectations of 133.0. Nevertheless, the index remained above the 100-point threshold that separates consumer optimism from pessimism.
In contrast to movements of the index in past months, which were largely driven by changes in consumers’ forward-looking expectations, the decline observed in March came primarily on the back of a sharp deterioration in consumer sentiment regarding the present situation—with the corresponding index losing more than 12 points, while the expectations index declined more modestly. However, this largely reflects a reversion to a more normal level—in the context of slowing domestic growth—given that the present situation index was at its highest level in nearly two decades as of February.
Looking at the details, consumers were markedly less upbeat about current business conditions as well as the labor market situation. The labor differential—the difference between the percentage of respondents who state that jobs are plentiful and those who say that jobs are hard to get—fell steeply from 34.0 in February to 28.3 in March. As for future expectations, consumers were also less optimistic about business conditions in the next six months as well as the labor market outlook. On the other hand, respondents became slightly more upbeat regarding their own income prospects.
Commenting on this month’s reading, Lynn Franco, senior director of economic indicators at The Conference Board, noted:
“Confidence has been somewhat volatile over the past few months, as consumers have had to weather volatility in the financial markets, a partial government shutdown and a very weak February jobs report. Despite these dynamics, consumers remain confident that the economy will continue expanding in the near term. However, the overall trend in confidence has been softening since last summer, pointing to a moderation in economic growth”.