U.S. Consumer Confidence Tumbles in March; Inflation Expectations Strengthen

The Conference Board's Index of Consumer Confidence fell 7.2% (-9.9% y/y) to 92.9 after a 4.9% decline in February to 100.1, revised from down 6.6%. A reading of 94.0 had been expected in the Action Economics Forecast Survey. The March figure was 17.6% below its November high. Weakness in confidence is widespread amongst components in this latest report.

The Expectations Index slumped 12.8% (-11.9% y/y) to 65.2, after a 9.0% February weakening, revised from a 12.9% decline. This latest figure was the weakest since March 2013. The Present Situation index fell 2.6% (-8.4% y/y) to 134.5, after declining 1.3% in February, revised from down 2.4%, after a 2.8% January fall. The reading was the lowest in six months.

The percentage of respondents assessing business conditions as “good” fell to 17.7% this month after declining to 19.1% in February. The index hit a high of 22.0 in October. The percentage assessing conditions as “bad” rose to 16.6% after falling to 14.8% in February. The appraisal of labor market conditions held steady m/m in March as 33.6% of respondents thought jobs were plentiful, down from 41.7% one year earlier. Jobs were viewed as hard to get by 15.7% of respondents this month, down from 16.0% in February. This measure has risen from 11.0% in January 2024. The labor market differential calculated by Haver Analytics (the percentage of consumers who think jobs are plentiful minus the percentage who believe that jobs are currently hard to get) stood at 17.9% compared to 17.6% in February and remained below a high of 47.1% in March 2022. This series has a 60% correlation with the unemployment rate over the last ten years.

Expectations for business conditions deteriorated in March. A lessened 17.1% of respondents expect conditions to improve over the next six months, down from 20.8% in both February and January, while a higher 27.3% expect them to deteriorate, up from 25.5% in February. On employment, a lessened 16.7% expect the number of jobs to increase over the next six months. The percentage expecting the number of jobs to decline in the next six months rose to 28.5% after surging to 26.6% in February, and increasing to 21.0% in January. A lessened 16.3% expect income to increase in six months. That remained down from a high of 20.7% in November and compares to a higher 15.5% who expect income to decrease.

The expected rate of price inflation over the next twelve months rose to 6.2% in March after increasing to 5.8% in February from 5.2% in January. Interest rates are expected to rise this year by a higher 54.6% of respondents, up from 52.6% in February. The percentage of respondents expecting equity prices to increase over the next twelve months plummeted to 37.4% after dropping to 46.7% in February, while the percentage expecting a decline in stock prices jumped to 44.5% after rising to 34.0% in February.

The percentage of respondents planning to buy a home rose in March to 5.4% from 5.3% in February. Plans to purchase an automobile eased to 10.3% this month from a downwardly revised 10.7% in February.

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