The latest Consumer Confidence Index survey indicates consumers aren’t as optimistic about the economy as they once were.
The Conference Board on Tuesday released its results for March, which showed that the Index fell to 124.1 from 131.4 last month after rising in February. Both components of the Index also declined. The Present Situation Index, which assesses current business and labor conditions, fell to 160.6 from 172.8 last month. The Expectations Index, which measures the short-term outlook, decreased to 99.8 from 103.8.
“Confidence has been somewhat volatile over the past few months, as consumers have had to weather volatility in the financial markets, a partial government shutdown and a very weak February jobs report,” According to Lynn Franco, senior director of economic indicators at The Conference Board.
She added that while consumers seem to be confident that the economy will continue to expand in the near term, she also acknowledged that the “overall trend in confidence has been softening since last summer, pointing to a moderation in economic growth.”
For current conditions, consumers who said they thought business conditions were good fell to 33.4 percent from 40.6 percent. Those who said they thought business conditions were bad rose to 13.6 percent from 11.1 percent. For their outlook over the next six months, those who said they expect business conditions to improve declined to 17.7 percent from 19.6 percent, while those who said they expect conditions to worsen inched up to 9.3 percent from 9.2 percent.
Consumers weren’t exactly optimistic about the labor market either. In the latest survey on consumer sentiment about the jobs front, consumers who described the availability of jobs as “plentiful” declined to 42 percent from 45.7 percent. Looking ahead, those who expect more jobs six months out fell to 16.4 percent from 19 percent.
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At this point, it would appear that even the federal government might be presuming slower growth for the balance of the year, and that would match with the results of the Conference Board’s latest survey. Last week the Federal Reserve said it will be “patient” on interest rate hikes, and hinted that it might not even hike rates at all this year.
Still, it’s hard to gauge the direction the U.S. economy is headed at this point.
The economy is expected to grow in the 2.3 percent or 2.4 percent range this year. That would be down from 2.9 percent last year, but it still represents growth nonetheless, even if at a slower pace. Confidence about the jobs picture has always had a strong impact on how confident consumers feel about their future. But this particular period might also have consumers feeling less optimistic about the size of their tax refunds.
There’s been a concern at retail that consumers might pull back on their spending when they see a lower tax refund check. But one accountant explained to Sourcing Journal Tuesday that consumers last year were getting more in their paycheck due to the federal tax law changes, which didn’t match with a corresponding adjustment in their withholding taxes. That translates to consumers actually getting back a portion of what would have been part of their refund in the current filing season-hence, the lower amount in refunds now.