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Economy in Brief

U.S. Consumer Confidence Declines Sharply in March as Expectations Erode
by Tom Moeller  March 31, 2020

The Conference Board's Index of Consumer Confidence declined 9.5% (-3.4% y/y) during March to a level of 120.0 following a 1.7% February gain, revised from 0.2%. A decline to an index level of 114.8 had been expected in the Action Economics Forecast Survey. Over the last 20 years, there has been a 70% correlation between the level of confidence and the y/y change in real consumer spending.

The index of consumer expectations plunged 18.4% (-10.3% y/y) to the lowest level since October 2016. A lessened 18.2% of respondents felt that business conditions would improve, down from a 26.9% high in March 2017. A greatly lessened 15.5% of respondents felt there would be more jobs. That was reduced from a 23.8% high in March 2017. Somewhat fewer respondents felt that income would increase.

The present situation index eased 0.9% (+2.9% y/y) after a 2.6% decline. A fairly steady 39.6% of respondents felt that business conditions were good and a reduced 44.9% thought that jobs were plentiful. Jobs were viewed as hard to get by 13.9%, which was steady m/m, but up from 11.0% during the last six months.

Expectations for the inflation rate in twelve months were steady m/m at 4.5%, but that was down from a high of 5.1% nine months earlier. Interest rates were expected to move higher in 12 months by 35.3% of respondents, half the percentage during 2018. A reduced 1.6% planned to buy a new home, but that remained up from 0.9% in December. A greatly lessened 3.8% planned to buy a new car while 47.6% planned to buy a major appliance, down from 55.0% in February.

By age group, the index of confidence amongst those under age 35 declined 9.6% (-4.5% y/y). For respondents aged 35-54, confidence fell 8.4% (-2.6% y/y) and for those over age 55, it fell 9.4% (-4.1% y/y).

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

Conference Board (SA, % Chg.) Mar Feb Jan Mar Y/Y 2019 2018 2017
Consumer Confidence Index -9.5 1.7 1.7 -3.4 -1.4 8.0 20.7
   Present Situation -0.9 -2.6 2.0 2.9 3.1 13.8 20.3
   Expectations -18.4 6.6 1.4 -10.3 -6.0 2.6 21.1
Consumer Confidence By Age Group
   Under 35 Years -9.6 3.7 -0.4 -4.5 0.3 2.7 6.4
   Aged 35-54 Years -8.4 6.4 -2.3 -2.6 -1.1 7.0 16.4
   Over 55 Years -9.4 -3.5 6.0 -4.1 -1.9 11.8 33.5
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