Consumers Temper Pessimism
The Conference Board Consumer Confidence Index, which hit an all-time low in February 2009, experienced mild improvement in March 2009. The Index increased from 25.3 to 26.0, although one of its two individual components slightly declined.
The Consumer Confidence Index, based on the Conference Board’s Consumer Confidence Survey, consists of the Present Situation Index, which decreased from 22.3 in February to 21.5 in March, and the Expectations Index, which rose from 27.3 in February to 28.9 in March. Brief highlights from each index follow.
Present Situation Index
The percentage of consumers rating current business conditions as “bad” increased during the past month, from 50.5% to 51.1%. The percentage of consumers rating current business conditions as “good” fractionally declined from 7% to 6.8%. More consumers now think jobs are hard to get, as the percentage of consumers expressing this opinion increased from 46.9% in February to 48.7% in March. The percentage of consumers finding jobs “plentiful” remained at 4.6%.
Expectations Index
Consumers were still pessimistic about economic conditions in the next six months in March, but mostly less so than in February. The percentage of consumers expecting business conditions to get worse in the next six months dropped from 40.7% to 39.1%, while the percentage of consumers expecting an improvement in business conditions in the next six months increased from 8.5% to 9.1%.
In the area of employment, 42.6% of consumers now expecting fewer jobs in the next jobs, compared to 47% in February. However, only 7.5% of consumers now expect their incomes to increase in the next six months, compared to 7.9% in February.
While any increase in the Consumer Confidence Index is positive for U.S. retailers, this month’s results are mixed as overall improvement was less than a full percentage point from last month’s all-time low. There have been a number of mixed positive and negative economic and consumer behavior signals so far this year, including:
Positive Signals
- Online shopping activity is showing signs of improvement.
- The U.S. trade deficit shrank in January 2009, although declining consumer demand drove the reduction.
- Personal spending of U.S. consumers increased in February 2009.
- The Restaurant Performance Index rose slightly in February 2009.
Negative Signals
- The U.S. GDP shrank 6.3% in Q4 2008.
- Total spending for the Easter holiday is expected to decline.
- Mexico applied retaliatory tariffs to 89 U.S. products in March 2009.
- U.S. retail and food services sales fell in February 2009.
- U.S. unemployment hit 8.1% in February 2009.
The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS. The cutoff date for March’s preliminary results was March 24th.
Editor’s Note: Consumer Confidence Index chart courtesy of the Conference Board.