Global| Mar 31 2020U.S. Consumer Confidence Declines Sharply in March as Expectations Erode
by:Tom Moeller
|in:Economy in Brief
Summary
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 [...]
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 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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