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Economy in Brief

U.S. Consumer Confidence Improves Significantly
by Tom Moeller  March 28, 2017

The Conference Board Consumer Confidence Index for March strengthened 8.2% (30.7% y/y) to 125.6, the highest level since December 2000. February's level was revised higher to 116.1 from 114.8. The Action Economics Forecast Survey looked for a decline to 113.6. During the past thirty years, there has been a 70% correlation between the level of consumer confidence and the y/y change in real PCE.

The rise in confidence reflected a 9.5% gain (36.1% y/y) in the expectations reading to 113.8 from 103.9. The present situation reading increased 6.5% (24.5% y/y) to 143.1 from 134.4.

The percentage of respondents indicating that business conditions are "good" strengthened to 30.7%, while those saying business conditions are "bad" fell to 12.9%. Respondents stating that jobs are "plentiful" surged to 31.7%, the highest percentage since August 2001, while those claiming jobs are "hard to get" eased to 19.5%. This change in views on labor market conditions led to a strengthened labor market differential (a reliable indicator of the unemployment rate) of 12.2 percentage points, which also was the highest level since 2001.

The percentage expecting business conditions to improve over the next six months surged to a roughly fourteen year high of 27.1%. For labor markets, the percentage expecting more jobs in the months ahead rose to 24.8% and surpassed its 1983 peak. The percentage of consumers expecting their incomes strengthened to 21.5% and equaled the recent high in December.

The expected rate of inflation in twelve months declined to 4.6%, a three-month low. The percentage expecting higher interest rates over the next twelve months rose to an expansion high of 72.3%.

The rise in the headline confidence index was paced by greatly improved optimism amongst individuals over age 55. Confidence amongst individuals aged 35-to-54 also strengthened. Respondents under age 35 registered a rise in confidence that remained slightly below the recent high.

The Consumer Confidence data is available in Haver's CBDB database. The total indexes appear in USECON, and the market expectations are in AS1REPNA

Conference Board (SA, 1985=100) Mar Feb Jan Y/Y % 2016 2015 2014
Consumer Confidence Index 125.6 116.1 111.6 30.7 99.8 98.0 86.9
  Present Situation 143.1 134.4 130.0 24.5 120.6 111.7 87.4
  Expectations 113.8 103.9 99.3 36.1 86.1 88.8 86.6
Consumer Confidence By Age Group
  Under 35 Years 137.1 120.6 129.2 10.9 122.4 116.0 106.6
  Aged 35-54 Years 129.3 118.0 114.2 27.5 106.2 103.9 92.4
  Over 55 Years 116.5 109.5 101.2 45.4 84.6 84.1 73.8
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