The Conference Board compiles a survey of consumer attitudes on present economic conditions and expectations of future conditions. Five thousand consumers across the country are surveyed each month. While the level of consumer confidence is associated with consumer spending, the two do not move in tandem each and every month. Why Investors Care
| Released on 3/27/07 For Mar 2007 | ||||||||||||
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Highlights
Consumer confidence fell back sharply in March at the same time that perceived inflation pressures resumed, a bad combination hinting at slower growth and stubborn interest rates ahead. The Conference Board's index fell to 107.2 in March vs. February's multi-year high of 111.2. But in an important plus, the present situation sub-index, at 137.6 vs. 137.1, continues to press to multi-year highs. A dip here would have signaled the risk of a significant downturn in the main index. But the expectations sub-index, at 86.9 vs. 93.8, continues to slide, now at the bottom of trend in readings that likely signal at least a topping in overall confidence.
High gas prices appear to be unsettling consumers who now see inflation rising 4.9 percent over the next year, up from last month's 4.6 percent. Another negative in the report was a jump higher in those who say jobs are hard to get, at 19.1 percent vs. February's 17.9 percent. Offsetting this, however, is a sharp jump in those saying jobs are plentiful, at 30.5 percent vs. 27.8 percent.
One likely negative in the month is concern over subprime mortgages and related losses in the stock market. The outlook for consumer confidence is neutral at the very best, with possible declines likely in line with moderating economic growth. Markets showed little immediate reaction to the results.
The Conference Board's consumer confidence index strengthened further in February, rising to 112.5 from 110.2 in January. February's level is the highest since August 2001. Importantly, inflation expectations edged down one-tenth of a percentage point in February, providing some solace to Fed officials concerned over inflation remaining too high. Given the weakness in housing, it is important that consumer spending remain moderately healthy to keep the forward momentum in the economy. March should give some indication whether all of the heightened chatter in the financial markets regarding subprime lending problems has been given much attention by consumers.
Consumer confidence Consensus Forecast for March 07: 107.0
Range: 100.0 to 112.5
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Typically retail sales will move in tandem with consumer optimism - although not necessarily each and every month. |
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