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Economy in Brief

U.S. Consumer Confidence: The Bloom Falls Off the Rose
by Tom Moeller  March 26, 2013

Following its strength in 2012, consumer confidence has trended lower versus the October high. The Conference Board's March Consumer Confidence Index retreated to 59.7 following a downwardly revised February reading of 68.0. Consensus expectations had been for 68.7 this month. During the last ten years, there has been a 47% correlation between the level of confidence and the three-month change in real PCE.

A sharp decline in the consumer expectation reading to 60.9 from 72.4 led the overall index lower. A greatly lessened 14.4% of respondents thought that business conditions would improve while just 12.3% thought there would be more jobs. That was the least since October 2011. The expected inflation rate in twelve months rose to 5.9%, its highest in six months and the percentage looking for higher stock prices fell slightly.

The present situations index also declined sharply to 57.9 and has moved sideways since October. A lessened 16.0% of respondents thought that business condition were good. The reading of the labor market continues to improve as only 36.2% thought that jobs were hard to get. That's versus the high of 49.4% in June 2011.

Consumer confidence varied greatly by age group. Those under 35 years old were the most confident, but that confidence has fallen sharply. Middle aged individuals were more confident this month but less so than younger individuals. Those over 55 years remained the least confident about the economy. 

 

Conference Board (SA, 1985=100) Mar Feb Jan Y/Y % 2012 2011 2010
Consumer Confidence Index 59.7 68.0 58.4 -14.1 67.1 58.1 54.5
  Present Situation 57.9 61.4 56.2 16.0 49.8 36.1 25.7
  Expectations 60.9 72.4 59.9 -26.2 78.6 72.8 73.7
Consumer Confidence By Age Group
  Under 35 Years 75.1 87.8 74.0 -9.5 86.5 77.3 70.4
  Aged 35-54 Years 62.2 67.5 58.9 -11.0 68.5 59.8 55.1
  Over 55 Years 50.1 60.1 51.6 -18.5 56.6 47.3 47.4
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