U.S. consumer confidence unexpectedly rose in March despite concerns about inflation and the war in Ukraine.
The Conference Board’s Consumer Confidence Indexrose slightly to 107.2 in March, up from 105.7 in February. It was the first time the metric has increased in three months.
The board’s Present Situation Index— based on consumers’ assessment of current business and labor market conditions — improved to 153.0 from 143.0 last month. However, the Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—declined to 76.6 from 80.8.
“Consumer confidence was up slightly in March after declines in February and January,” said Lynn Franco, senior director of economic indicators at The Conference Board. “The Present Situation Index rose substantially, suggesting that economic growth continued into late in the first quarter. Expectations, on the other hand, weakened further, with consumers citing rising prices, especially at the gas pump, and the war in Ukraine as factors.”
At the same time, he added, purchasing intentions for big-ticket items like automobiles have softened somewhat over the past few months as expectations for interest rates have risen.
Franco noted that consumer confidence continues to be supported by strong employment growth and, as a result, has been holding up remarkably well despite geopolitical uncertainties and expectations for inflation during the next 12 months reaching 7.9 percent—an all-time high.
“However, these headwinds are expected to persist in the short term and may potentially dampen confidence as well as cool spending further in the months ahead,” he said.
Here are additional highlights from the Conference Board’s March report.
Present Situation: Consumers’ appraisal of current business conditions improved in March:
- 19.6% of consumers said business conditions were “good,” up from 17.6%; and
- 22.1% of consumers said business conditions were “bad,” down from 25.1%.
Consumers’ assessment of the labor market also improved:
- 57.2% of consumers said jobs were “plentiful,” up from 53.5%, a new historical high; and
- 9.8% of consumers said jobs are “hard to get,” down from 12.0%.
Expectations Six Months Hence: Consumers’ optimism about the short-term business conditions outlook declined in March:
- 18.7% of consumers expect business conditions will improve, down from 21.3%; and
- 23.8% expect business conditions to worsen, up from 19.9%.
Consumers were mixed about the short-term labor market outlook:
- 17.4% of consumers expect more jobs to be available in the months ahead, down from 19.4%; and
- Conversely, 17.7% anticipate fewer jobs, down from 19.6%.
Consumers were also mixed about their short-term financial prospects:
- 14.9% of consumers expect their incomes to increase, up from 14.7%; and
- 13.7% expect their incomes will decrease, up from 13.0%.