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Economy in Brief

U.S. Consumer Confidence Strengthens Y/Y; Inflation Expectations Rise Sharply As Well
by Tom Moeller  March 27, 2012

The Conference Board's Index of Consumer Confidence fell in March to 70.2 from a revised 71.6, last month reported as 70.8. The latest two figures were the highest since last February and were up nearly three-quarters from the October low. The number matched Consensus estimates. During the last ten years there was been a 48% correlation between the level of confidence and the three-month change in real PCE.

The present situation reading improved dramatically to 51.0 which was its highest level since September 2008. More respondents saw jobs as being plentiful but there also was an uptick in the "jobs hard to get" reading. An improved 14.3% of respondents thought business condition were good and the percentage indicating that they were bad was 32.7% versus 51.0% at the recession peak.

The expectations component of confidence slipped m/m to 83.0 but that still was nearly its highest level in a year. The percentage expecting business conditions to improve was at its highest in a year. Though expectations for more jobs slipped m/m, the level remained near its highest also in a year. Income expectations also have improved sharply.

Expectations for inflation in the next twelve months jumped m/m to 6.3% from 5.5% in February, up sharply from a low of 4.9% in July 2010. The percentage of people looking for stock prices to rise increased to 34.4% this month, the most optimistic since May, while the percent who are bearish held in March at 32.5%, the least negative since May. The percentage expecting higher interest rates rose modestly to 46.6%

Headline figures on consumer confidence are carried in Haver's USECON database. The Conference Board's detailed data are found in Haver's CBDB database, and the consensus expectation figure is from Actions Economics, as tabulated in the AS1REPNA database.

Conference Board (SA, 1985=100) Mar Feb Jan Y/Y % 2011 2010 2009
Consumer Confidence Index 70.2 71.6 61.5 10.0 58.1 54.5 45.2
Present Situation 51.0 46.4 38.8 36.0 36.2 25.7 24.0
Expectations 83.0 88.4 76.7 2.1 72.8 73.7 59.3
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