U.S. Consumer Confidence Weakens Broadly

The consumer has become wary about the current and future economic environment. The Conference Board Consumer Confidence Index declined 5.6% (-2.3% y/y) to 124.1 during March and reversed most of February's increase. The decline left confidence 10.0% below the cycle high reached last October. The m/m decline surprised expectations in the Action Economics Forecast Survey which were for a slight rise to 132.3. During the past ten years, there has been a 61% correlation between the level of consumer confidence and the year-on-year change in monthly real consumer spending.

The decline in confidence overall reflected a diminished perspective of the current & future state of affairs. The reading of the present situation declined 7.1% (+1.6% y/y) to 160.6, the lowest level since last April. The expectations reading declined 3.9% (-6.0% y/y) to 99.8 after a 16.1% jump in February, and was 13.3% below the cycle peak reached in October.

The percentage of respondents who believed that business conditions were good dropped sharply to 33.4% from a high of 42.0% last November. The percentage of respondents who believed jobs were plentiful fell to 42.0%, the lowest percentage in nine months. Jobs were viewed as hard to get by an increased 13.7%, up from the cycle low of 11.7% reached in February.

On the expectations front, a greatly lessened 17.7% of respondents felt that business condition would improve. A fewer 16.4% thought that there would be more jobs, down from 22.7% in November, though an improved 21.0% felt that income would increase. That percentage remained nevertheless below the 25.4% who thought in August that income would increase.

A slightly higher 4.5% of respondents thought that inflation would rise, though that remained below the 5.0% who thought so in July. The 64.7% who felt that interest rates would rise was below the 73.2% October high.

The 0.8% of respondents who planned to buy a new home was half this cycle's high registered in July 2017 and matched the least since September 2016. Plans to buy a major appliance remained low.

By age group, lessened confidence was widespread, but most pronounced amongst younger individuals. For those who were under age 35, the confidence reading declined 12.3% this month and mostly reversed the February gain. The reading was at the low end of its range since the beginning of last year. Confidence in the 35-54 year old age bracket fell sharply to the lowest level since June 2017, off 14.9% from the peak last October. Confidence amongst individuals over age 55 eased slightly m/m, but was 7.0% below the October peak.

The Consumer Confidence data are available in Haver's CBDB database. The total indexes, which are indexed to 1985=100, appear in USECON, and the market expectations are in AS1REPNA.