The nations two leading consumer confidence indices indicate that positive reports on employment and housing prices may have helped improve consumer confidence in the back half of March.
The Conference Board Consumer Confidence Index, which is based on survey responses through March 14, showed consumer confidence dropping sharply in early March. The index now stands at 59.7 (1985=100), down from 68.0 in February.
Household expectations waver between buying into the idea that 2013 is the year the economy gains traction and the feeling that they might be disappointed again, The Conference Board wrote in a March 29 blog entry.
The rival Index of Consumer Sentiment published by Thomson Reuters and the University of Michigan, pointed toward small gains for the month. The index, which considered responses deeper into the month, reached 78.6, up 1.3 percent from February and 3.1 percent from March 2012.
University of Michigan Economist Richard Curtin attributed the improved outlook to reports of expanding employment and the broadest rise in home prices in five years, but said consumers remained concerned that inflation will outstrip their income growth in the year ahead. Curtin said consumer sentiment improved in the back half of the month as consumers discounted the Obama administrations warning that cuts in federal spending would lead to economic catastrophe and concluded job gains would accelerate in the months ahead.
This is not the first time that optimism increased following the Great Recession, but the recent gains stand a better chance to be sustained and ultimately lead to a lower unemployment rate and support consumer spending increases in the year ahead, Curtin wrote.
