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 3/25/08 For Mar 2008 | ||||||||||||
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Highlights
Consumer confidence continues to plunge at the same time that inflation expectations are spiking, in what are the worst results this report can signal. Consumer confidence fell to 64.5 in March vs. February's 76.4 reading. Both March and February are the lowest readings since the beginning of the expansion in 2003.
The main index is made up of two components: present situation, down nearly 15 points in the month to 89.2, and expectations, the more heavily weighted of the two components and, at 47.9, down more than 10 points in the month and at a 35 year low. Each of these components is broken down further by job assessments and by income and business assessments. The job assessments are important to watch as a signal for the month's payroll data -- and March's report points to trouble. Those saying jobs are currently hard to get rose nearly 2 percentage points to 25.1 percent while those saying jobs are plentiful fell nearly 3 points to 18.8 percent. The expectations for future job conditions are likewise pessimistic.
Now perhaps the worst news in the report as 1-year inflation expectations spiked 7 tenths to 6.1 percent, consistent with a similar spike in the Reuters/University of Michigan consumer sentiment report. This reading reflects rising gas and food prices and will seriously raise questions, especially among dissenters on FOMC policy, whether interest rate cuts will unanchor inflation expectations.
Stocks weakened in immediate reaction to the report which is likely to pressure the dollar and push Treasury yields lower through the session. Consumer confidence data are often hazy compared to actual economic data, but today's report very clearly indicates that consumers are very pessimistic on the economy and very worried about inflation.
The Conference Board's consumer confidence index continued downward, reflecting concern over rising gasoline prices, stock market declines, and consumer balance sheets - not to mention the publicly bantered credit market concerns. The index slipped badly in February to 75.0 from 87.3 in January. The latest reading is the lowest since the beginning of the expansion in early 2003. Pessimists have overtaken optimists in four the report's five main components with future income the only positive. The only good news in the report was a steady reading in one year inflation expectations, unchanged at 5.3 percent and in contrast to a mid-month spike in the Reuters/University of Michigan reading.
Consumer confidence Consensus Forecast for March 08: 73.0
Range: 71.0 to 78.0
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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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