The University of Michigan and Thomson Reuters found that consumers were slightly more optimistic, up from 77.6 in February to 78.6 in March. This is a reversal from the earlier estimate, which observed an unexpected drop in confidence for the month. With this revision, the Consumer Sentiment Survey’s key index has risen for four straight months, up from 72.9 in December. With that said, it is still below the 82.7 value observed in November, and ideally, we would like to see the index closer to 100.
The improvement in the data was mainly in the perceptions about the current economic environment, with the index related to present conditions up from 89.0 to 90.7 for the month. The initial data had suggested that perhaps higher gasoline prices, increased payroll taxes, or the discussion about the across-the-board federal spending cuts might have had an impact. To the extent that those factors were an issue earlier in the month when the first estimate was released, those concerns must have dissipated somewhat since then. Sentiment about future economic conditions was also marginally higher, with that component up from 70.2 to 70.8.
Consumers are currently anticipating 3.2 percent increases in prices over the next year, down slightly from the 3.3 percent forecast last month.
Chad Moutray is chief economist, National Association of Manufacturers.