Consumer confidence dipped in March, marking the fourth consecutive monthly decrease of the index. The Conference Board's Consumer Confidence Index was 62.5, down 2.3 points from the revised 64.8 in February. The Index remains at the lowest level since October 1993. The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households.
Confidence fell across both portions of the Conference Board index. Present Conditions, a factor in the total composite index, dropped to 62.4 from 63.5 in February. This index measures how consumers perceive the current state of the economy.
The Expectations portion of the index, a measure of future economic activity, was 62.5, down 3.2 points from February.
The University of Michigan's Consumer Sentiment Index, a comparable index, also decreased in March to 77.6 from 79.9 in February. The component indices were also down. The Expectations Index decreased slightly to 69.3 from 69.9 in February. The Present Conditions portion fell 5.4 points to 90.0.
The timing of the surveys makes for an interesting comparison of consumer confidence levels in March. Responses to the Conference Board survey were taken on or before March 18, before the start of Operation Iraqi Freedom. The University of Michigan survey releases preliminary estimates in the middle of the month and a final tally of results at the end of each month. The preliminary March survey results (also taken before the beginning of the war) showed a greater decrease in confidence than the final results, indicating that the actual start of the war may have eased the minds of some consumers.
Regardless of the possible effects of reduced uncertainty about the war, both indices remain at their lowest levels in more than nine years. Consumers are increasingly concerned about both the current state of the economy and the outlook for the future. High debt levels and the weak labor market also weigh heavily on consumers.
However, some areas still provide support for further consumer spending. Although threatened by weak labor market conditions, income and wages continue to grow modestly. Interest rates remain low and disposable income may be boosted by the passage of an effective economic stimulus package. Since consumer spending accounts for two-thirds of the U.S. economy, consumer confidence will remain a closely watched and critical component for economic recovery.
Sources: www.cnnfn.com
www.conference-board.com
www.economy.com
