Consumers are feeling less confident about the future state of the US economy, according to new data released Tuesday morning.
The Conference Board’s Consumer Confidence Index for March came in at a reading of 104.7, little changed from a revised 104.8 in February but short of the 107 reading expected by economists.
The “Present Situation Index,” which measures consumers’ assessment of current business and labor market conditions, increased to 151 in March from 147.6 in February.
However, the “Expectations Index,” which tracks consumers’ short-term outlook for income, business, and labor market conditions, fell to 73.8 in March from 76.3 last month. Historically, a reading below 80 in that category signals a recession in the coming year.
“Consumers’ assessment of the present situation improved in March, but they also became more pessimistic about the future,” said Dana Peterson, chief economist at the Conference Board.
“Confidence rose among consumers aged 55 and over but deteriorated for those under 55,” Peterson said. “Separately, consumers in the $50,000-$99,999 income group reported lower confidence in March, while confidence improved slightly in all other income groups.”
“However, over the last six months, confidence has been moving sideways with no real trend to the upside or downside either by income or age group.”
Economists largely shrugged off the pessimism. Oxford Economics chief US economist Ryan Sweet wrote in reaction to the data that March’s dip doesn’t change his forecast for consumer spending this quarter.
“The relationship between consumer sentiment and real consumer spending is loose, particularly in the near-term,” he said. “Typically changes in sentiment explain little of the fluctuations in real consumption. Rather, the labor market, real disposable income, and household net worth matter more.”
Tuesday’s data comes ahead of critical inflation data due later this week. On Friday, the government will release the Personal Consumption Expenditures Price Index as investors eye updates to “core” PCE growth, the Federal Reserve’s preferred inflation gauge.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
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