Consumer confidence surged in March as Americans grew more optimistic about the economy and labor market.
The Conference Board’s Consumer Confidence Index rose in March to its highest reading in a year, after a modest increase in February. The Index now stands at 109.7, up from 90.4 in February.
The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—climbed from 89.6 to 110.0. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—also improved, from 90.9 last month to 109.6 in March.
“Consumer Confidence increased to its highest level since the onset of the pandemic in March 2020,” said Lynn Franco, senior director of economic indicators at The Conference Board. “Consumers’ assessment of current conditions and their short-term outlook improved significantly, an indication that economic growth is likely to strengthen further in the coming months. “
Consumers’ renewed optimism boosted their purchasing intentions for homes, autos and several big-ticket items. At the same time, Franco noted, concerns of inflation in the short-term rose, most likely due to rising gas prices at the pump, which may temper spending intentions in the months ahead.”
Consumers’ assessment of current conditions improved significantly in March. The percentage of consumers claiming business conditions are “good” increased from 16.1% to 18.5%, while the proportion claiming business conditions are “bad” fell from 39.7% to 30.5%.
Consumers’ assessment of the labor market also improved. The percentage of consumers saying jobs are “plentiful” increased from 21.6% to 26.3% while those claiming jobs are “hard to get” declined from 22.4% to 18.5%.
Consumers’ optimism about the short-term outlook improved considerably. The percentage of consumers expecting business conditions will improve over the next six months rose from 30.7% to 40.8%. The proportion expecting business conditions will worsen declined from 17.7% to 11.0%.
Consumers’ outlook regarding the job market was also more favorable. The proportion expecting more jobs in the months ahead increased from 27.4% to 36.1%, while those anticipating fewer jobs declined from 21.3% to 13.4%. Regarding short-term income prospects, 15.5% of consumers expect their incomes to increase in the next six months, up modestly from 14.8% in February. However, 13.3% expect their incomes to decrease, up slightly from 12.9% last month.
The monthly Consumer Confidence Survey, based on a probability-design random sample, is conducted for The Conference Board by Nielsen.