The Conference Board has registered a March consumer confidence rebound in the US after declining in February. The Conference Board Consumer Confidence Index for March came in at 82.3, a six-year high, compared to 78.3 in February (1985 = 100).
The Expectations Index rose from 76.5 in February to 83.5 in March, while the Present Situation Index slid from 81 to 80.4.
Lynn Franco, Director of Economic Indicators at The Conference Board, said, regarding the March consumer confidence rebound:
“Consumer confidence improved in March, as expectations for the short-term outlook bounced back from February’s decline. While consumers were moderately more upbeat about future job prospects and the overall economy, they were less optimistic about income growth.”
“The Present Situation index, which had been on an upward trend for the past four months, was relatively unchanged in March. Overall, consumers expect the economy to continue improving and believe it may even pick up a little steam in the months ahead.”
More people saying business is good and bad
How consumers perceive current conditions in March changed little in comparison to February. There was an increase in the percentage of people saying that business conditions are “good” to 22.9%, compared to 21.2 in February. However, those saying they see business conditions as “bad” also rose, from 22% in February to 23.2% in March.
Consumers see the labor market as unchanged compared to February. There was a slight fall among those reporting that jobs are “plentiful” from 13.4% to 13.1%, while those claiming jobs are “hard to get” rose to 33% from 32.4%.
A total of 175,000 new jobs were created by employers in February, much more than during January or December. Most economists believe 2014 will see solid job gains.
In February, consumers’ expectations fell, and then recovered in March. Of the consumers who responded, 18.1% in March believe business conditions will get better over the next 6 months, compared to 17.3% last month. The percentage of consumers expecting business conditions to worsen fell from 13.6% to 10.2%.
There was also moderately more optimism in March in consumers’ outlook for the labor market. The proportion of people expecting better job prospects rose from 13.7% in February to 13.9%.
Only 14.9% of respondents expect their incomes to grow compared to 15.8% in February, but there was also a decline in people expecting a fall in incomes, from 13.4% to 12.1%.
Approximately two-thirds of the US economy consists of consumer spending, which has been fluctuating over the last few months and fell significantly in January/February 2014 due to abnormally harsh weather conditions. Retail sales fell 0.6% in January and recovered moderately in February.
CBS News quoted Chris Christopher Jr., director of consumer economics at IHS Global Insight, who said “This is a good report. Currently, consumer confidence is at rather elevated levels. Consumer confidence made significant progress in March, indicating that the winter economic blues on the consumer front are somewhat behind us.”
Encouraging GDP forecast for 2014
The National Association for Business Economics (NABE) says the adverse weather this winter will probably cost Q1 2014 GDP growth figures about half of one percentage point. In its March 2014 Outlook Survey, NABE writes that US economic expansion is forecast to speed up this year – and in 2015 too.
NABE President, Jack Kleinhenz, who is also chief economist of the National Retail Federation, said:
“The consensus of the panelists is that real GDP will advance at a weak 1.9% annualized rate in the first three months of the year but pick up by year end to a pace of more than 3%. On an annual average basis, real GDP growth is forecast to increase from 1.9% last year to 2.8% this year, and to 3.1% in 2015. Conditions in a variety of areas—including labor, consumer, and housing markets—are expected to improve over the next two years, while inflation remains tame.”
Fifty-seven percent of NABE panelists believe the Fed will end its bond-buying stimulus program in Q4 2014, while 25% think it will end earlier. Seventeen percent predict it will end in 2015 and 2% see it persisting until 2016 or later.