The Consumer Confidence Index from the Conference Board dropped again, decreasing from 68.0 in February to 59.7 in March. In doing so, it essentially erases the rebound in sentiment observed in February, as we are not far from the 58.4 value observed in January and still below the recent peak of 73.1 in October. This slip in confidence was also observed in the most recent survey from the University of Michigan, with a revised number in that report due on Friday.
The decrease in the Conference Board index stemmed from decreased perceptions about both the current and future economic environments, with the forward-looking measure down the most from 72.4 to 60.9. The press release suggests that at least part of the decline could be due to the across-the-board federal budget cuts that went into effect on March 1. Lynn Franco, the Director of Economic Indicators at the Conference Board said, “The recent sequester has created uncertainty regarding the economic outlook and as a result, consumers are less confident.”
The lower sentiment transferred into pocketbook issues, as well. The percentage of respondents feeling that jobs were more plentiful was down marginally from the month before. Similarly, there was a drop in those expecting their incomes to increase.
The importance of these variables, of course, is how they translate into consumer spending patterns, and it appears that there were fewer people planning to purchase a motor vehicle (down from 11.1 to 10.1 percent) or appliances (down from 49.6 to 45.2 percent). On the positive side, those intending to purchase a home ticked higher (up from 3.8 to 5.6 percent). With that said, the most recent retail sales data tended to show higher – not lower – levels of purchases, but most of that was in gasoline and auto sales. That data also pre-dates whatever impacts might come from fiscal sequestration.
Chad Moutray is chief economist, National Association of Manufacturers.