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Economy in Brief

U.S. Consumer Confidence Is Stronger Than Expected
by Tom Moeller  March 29, 2016

The Conference Board's Consumer Confidence Index during March increased 2.3% (-5.1% y/y) to 96.2 from 94.0 in February, revised from 92.2. The latest figure compared to an expected 93.5 in the Action Economics Forecast Survey. During the last ten years, there has been a 70% correlation between the level of confidence and the y/y change in real consumer spending.

A 6.0% rebound to 84.7 (-11.8% y/y) in the expectations reading to 84.7 was behind the rise in the overall index. In contrast, the present situations figure fell 1.3% (+3.7% y/y) to 113.5, repeating its February fall.

Expectations that business conditions would be improved in six months prompted the rebound in the overall expectations index. Expectations for more jobs followed, although a lessened percentage thought that income would improve. To the downside, consumers perception that current business conditions were good fell to the lowest percentage since August. In contrast, the appraisal that jobs were hard to get increased to 26.6% of respondents, the highest fraction since July. The percentage who thought that jobs were plentiful increased to 25.4%, the highest level since just before the recession.

Expectations for the inflation rate held steady m/m at 4.7%, the lowest level since early 2007. Higher interest rates were expected by a sharply reduced 59.8% of respondents.

Plans to buy a new home deteriorated to the lowest level since August, but major appliance buying plans recovered much of the prior month's decline. Intentions to buy a new car declined, however, to the lowest point since July.

By age group, confidence amongst respondents under age 35 rebounded to the highest point in twelve months. Confidence amongst those aged 35-54 years eased to a four-month low, and confidence amongst respondents over age 55 rose slightly. Both of these latter figures remained sharply lower versus last year's highs.

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

The Outlook, Uncertainty, and Monetary Policy is the title of today's speech by Fed Chair Janet L. Yellen, and it can be found here.

Conference Board (SA, 1985=100) Mar Feb Jan Y/Y % 2015 2014 2013
Consumer Confidence Index 96.2 94.0 97.8 -5.1 98.0 86.9 73.2
  Present Situation 113.5 115.0 116.6 3.7 111.7 87.4 67.6
  Expectations 84.7 79.9 85.3 -11.8 88.8 86.6 77.0
Consumer Confidence By Age Group
  Under 35 Years 124.5 112.1 123.7 -0.3 116.0 106.6 93.1
  Aged 35-54 Years 100.3 101.2 102.1 -4.3 103.9 92.4 76.8
  Over 55 Years 81.4 80.9 83.1 -9.3 84.0 73.8 61.2
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