Americans continue to sour on the US economic outlook as uncertainty around President Trump’s policies and higher prices weigh on consumer sentiment.
The latest consumer confidence index reading from the Conference Board was 92.9 in March, below the 100.1 seen in February and the lowest level in more than four years. The expectations index, which is based on consumers’ short-term outlook for income, business, and labor market conditions, ticked lower to 65.2 from 72.9 and remained below the threshold of 80 — which typically signals recession ahead — for the second straight month.
This marked a 12-year low for the expectations index.
“Consumers’ expectations were especially gloomy, with pessimism about future business conditions deepening and confidence about future employment prospects falling to a 12-year low,” Stephanie Guichard, a senior Economist of global indicators at The Conference Board said in the release. “Meanwhile, consumers’ optimism about future income—which had held up quite strongly in the past few months—largely vanished, suggesting worries about the economy and labor market have started to spread into consumers’ assessments of their personal situations.”
Tuesday’s reading is one of several that has showed weakening expectations for the economy among consumers. The growing market fear is that consumer’s feeling worse about the economic outlook could prompt more cautious spending.
But both Federal Reserve chair Jerome Powell and economists have questions whether readings in the “soft” survey data like the consumer confidence index will translate to a deterioration in the “hard” economic data like real consumer spending.
“The relationship between survey data and actual economic activity hasn’t been very tight,” Powell said in a press conference on March 19. “There have been plenty of times where people are saying very downbeat things about the economy and then going out and buying a new car. But we don’t know that that will be the case here. We will be watching very carefully for signs of weakness in the real data.”
