Consumers feel lousy about the future, but the present doesn't seem so bad
U.S. consumer confidence slumped in March, but maybe the real surprise is that it didn’t collapse altogether, given the headlines this month: Middle East revolts, gasoline at $4 a gallon, another downturn in housing and Japan’s horrific natural and nuclear disasters.
People are fearful of the future, yet they don't feel all that bad about the present.
The Thomson Reuters/University of Michigan index of consumer confidence tumbled to 67.5 this month, the lowest since November 2009, after reaching a three-year high of 77.5 in February.
To put those numbers in perspective, for most of 2004 through mid-2007 the index was above 90. So even when they were feeling better in February, relatively speaking Americans still were nowhere near as confident as they were before the Great Recession.
Even so, at 67.5 this month the index remains well above the 28-year low of 55.3 reached in November 2008, when the economy was melting down.
Amid sharply rising gasoline and food prices Americans’ expectations for their own finances deteriorated in March, according to the survey, which is based on a poll of 500 households. Just one in four consumers expected their financial position to improve in the year ahead.
And the percentage of people who expected the economy to get better in the next 12 months plunged to 21% from 40% in February, the largest one-month drop in the survey’s history.
Despite their dour mood about what’s to come, however, consumers don’t see their current lot in the same light, even amid all the depressing headlines: While the survey’s expectations index plummeted to 57.9 this month from 71.6 in February, the index of current conditions slipped only modestly, to 82.5 from 86.9.
Asked about their spending intentions, 62% of consumers said they still thought this was a good time to buy big-ticket items such as appliances or furniture, nearly unchanged from 63% in February. And 60% said this was a good time to buy a car, up from 59% last month.
The economy depends on consumer spending, and the March confidence survey showed “no decline in buying plans despite all the widespread economic gloom,” the survey summary said.
That also suggests that if the ugly headlines relent, consumers' expectations might turn up again.
-- Tom Petruno