Consumer confidence weakens further as bid inflation and war crush hopes

A strong labor market and receding covid-19 boosted consumer confidence in March, although inflation, gasoline prices and the outbreak of war in Ukraine dampened expectations for the future short term.

The Conference Board said its consumer confidence index came in at 107.2 in March, in line with expectations. This was below the 110.5 index level reported last month for February and below 111.1 in January.

That would have made March the third monthly decline except for a downward revision for February to 105.7. This deeply depressing reading came as the omicron variant drove record infection rates and inflation hit the worst level in forty years.

Following the February revision, the March reading now signals a slight improvement.

Expected inflation over the next 12 months hit 7.9%, a record high and a sign that consumers do not believe inflation will be under control this year. The Bureau of Labor Statistics reported on March 10 that the consumer price index rose 7.9% in February from a year earlier.

The improvement in the overall index was entirely due to a rise in the Current Conditions Index, based on consumers’ assessment of current business and labor market conditions, to 153.0 from 143. 0 last month.

The Expectations Index, based on consumers’ short-term outlook for income, business and labor market conditions, fell to 76.6 from 80.8.

So people have become a bit more comfortable with the current situation and less optimistic about the future.

“Consumer confidence rose slightly in March after declines in February and January,” said Lynn Franco, senior director of economic indicators at The Conference Board. “The current situation index rose significantly, suggesting that economic growth continued at the end of the first quarter. Expectations, on the other hand, weakened further, with consumers citing rising prices, particularly at the gas pump, and the war in Ukraine as factors.Meanwhile, buying intentions for big-ticket items like automobiles have eased somewhat in recent months as interest rate expectations have risen .

The share of consumers who say there are plenty of jobs rose 3.7 points to 57.2%, a new all-time high. This could add to fears that an ultra-tight labor market could generate even higher inflation. At a news conference following March’s Federal Open Market Committee meeting, Fed Chairman Jerome Powell said the tight labor market was already “unhealthy.”

Consumers were mixed about the short-term outlook for the job market. Seventeen percent of consumers expect more jobs to become available in the coming months, down from 19.4% in February. The share expecting fewer jobs also fell, from 19.6% to 17.7%.

Opinions on the economic situation remain negative, although the gap between good and bad assessments has narrowed. The share of consumers saying the terms of business are bad rose from 25.1% to 22.1%, while the share of consumers saying the terms are good rose from 17.6% to 19.6%.
And consumers have become pessimistic about the near-term outlook for economic conditions. A month ago, 21.3% expected things to get better and 19.9% ​​thought things would get worse. Now only 18.7% expect conditions to improve and 23.8% expect conditions to worsen.

Consumers were also mixed about their short-term financial outlook. Those expecting an increase in income rose slightly from 14.7% to 14.9%. Those expecting a drop in income also fell from 13% to 13.7%.

“Nevertheless, consumer confidence continues to be supported by strong employment growth and has therefore held up remarkably well despite geopolitical uncertainties and inflation expectations over the next 12 months reaching 7.9%, a level However, these headwinds are likely to persist in the near term and could potentially damage confidence and further cool spending in the months ahead,” Franco said.


Breitbart

Not all news on the site expresses the point of view of the site, but we transmit this news automatically and translate it through programmatic technology on the site and not from a human editor.
Back to top button