economic indicators

Consumer confidence in U.S. decreases more than forecast

BLOOMBERG FILE PHOTO/SAM HODGSON
CONSUMER CONFIDENCE IN THE U.S. fell by more than forecast in March after rising to a three-month high in February.
Posted 3/26/13

WASHINGTON - Confidence among U.S. consumers fell more than forecast in March as Washington’s budget battle soured Americans’ views of the economic outlook.

The Conference Board’s index declined to 59.7 from a revised three-month high of 68 in February, data from the New York-based private research group showed today. Economists surveyed by Bloomberg projected the March measure would fall to 67.5.

“This is really quite a big hit,” said Ian Shepherdson, chief economist at Pantheon Macroeconomic Advisors Inc. in White Plains, N.Y., who projected a reading of 63. “The longer confidence stays down and the further it falls, the more chance that it will be reflected in weaker spending.”

Concern mounted that sweeping cuts in planned government spending may hinder the expansion and limit recent progress in the labor market. At the same time, a rally in stocks and a housing rebound that’s helping shore up household balance sheets may help keep consumer purchases, which account for about 70 percent of the economy, from slumping.

Stocks held gains after the report, with the Standard & Poor’s 500 index climbing 0.6 percent to 1,560.51 at 10:34 a.m. in New York.

Economists’ projections

Forecasts of 79 economists surveyed by Bloomberg ranged from 60 to 72. The measure averaged 53.7 in the recession that ended in June 2009.

Another report today showed home prices in 20 U.S. cities jumped in the 12 months to January by 8.1 percent, the biggest year-to-year gain since June 2006 and a sign the housing-market recovery is strengthening. The S&P/Case-Shiller index of property values climbed 1 percent from December.

The Commerce Department said sales of new homes in February capped the best back-to-back months in more than four years. Purchases of newly built homes fell 4.6 percent to a 411,000 annualized pace, following a 431,000 rate in the prior month.

The Conference Board’s gauge of consumer present conditions dropped to 57.9 in March from 61.4 in February. The measure of expectations for the next six months decreased to 60.9 from 72.4.

Those expecting business conditions to improve in the next six months declined to 14.4 percent in March, the smallest share since November 2011, from 18 percent the prior month.

“The recent sequester has created uncertainty regarding the economic outlook and as a result, consumers are less confident,” said Lynn Franco, director of economic indicators at the Conference Board, said in a statement.

Jobs outlook

The share of consumers expecting more jobs to become available in the next six months slumped to 12.3 percent in March, the worst reading since October 2011, from 16.1 percent in February.

The share of respondents who expect an increase in their income in the next six months fell to 13.7 percent from 15.8 percent the prior month.

The number of respondents who said jobs are currently plentiful fell to 9.4 percent in March from 10.1 percent.

Other measures of consumer confidence have been mixed. The Bloomberg Consumer Comfort monthly gauge of expectations improved to minus 4 in March from minus 7 in February, according to results of the Bloomberg Consumer Comfort Index. The weekly measure fell for the first time in seven weeks, to minus 33.9 from minus 31.6.

The Thomson Reuters/University of Michigan preliminary index of consumer sentiment decreased in March to 71.8 from 77.6 the prior month, as Americans’ expectations deteriorated.

Payroll tax

Darden Restaurants Inc., whose brands include the Olive Garden and Red Lobster, is among companies seeing signs of a pickup in household spending after 2 percentage-point increase in the tax that funds Social Security. The levy means Americans earning $50,000 a year are taking home about $80 less a month.

“The consumers just weren’t prepared, despite all the conversation, for the payroll tax increase, and there was a pretty rapid spike up in gasoline prices,” Clarence Otis, chairman and chief executive officer of Darden, said on a March 22 earnings call. “But March indicates that consumers have adjusted.”

A pickup in the labor market may help sustain sentiment and spending. Employers hired a net 236,000 workers last month following gains of 119,000 in January, Labor Department figures show. That helped to push the unemployment rate down to 7.7 percent, its lowest level since December 2008.

Fuel prices are also stabilizing after rising since mid- December. The price of a gallon of regular unleaded gasoline was $3.67 on March 24, down from $3.79 at the end of February, according to AAA, the largest U.S. motoring group.

Calendar
PBN Hosted
Events

Join PBN and two panels of successful female executives, business owners and entrepreneurs as we delve into what women should do to advance their careers, and become leaders in the corporate world and their own enterprises.
  • Book of Lists Party
    Save the date - January 15, 2015 for PBN's Book of Lists Party at the Providence ...
  • Best Places to Work
    Enrollment is now open for the 7th annual Best Places to Work program. Winners w ...
Advertisement
Purchase Data
Book of Lists
Lists
Book of Lists cover
PBN's annual Book of Lists has been an essential resource for the local business community for almost 30 years. The Book of Lists features a wealth of company rankings from a variety of fields and industries, including banking, health care, real estate, law, hospitality, education, not-for-profits, technology and many more.
Data icons
Data can be purchased as single lists, in either Excel or PDF format; the entire database of the published book, in Excel format; or a printed copy of the Book of Lists.
  • Purchase an e-File of a single list
  •  
  • Purchase an e-File of the entire Book of Lists database
  •  
  • Purchase a printed copy of the Book of Lists
  •  
    National
    Local
    Latest News
    Advertisement