Consumer sentiment reached its highest level in a year last month. After a modest February increase, the Conference Board’s Consumer Confidence Index surged in March to 109.7, up from 90.4 one month earlier.
The Conference Board’s Present Situation Index, based on consumers’ assessment of current business and labor market conditions, climbed from 89.6 to 110 in March. The Expectations Index, predicated on consumers’ short-term outlook for income, business and labor market conditions, also improved, from 90.9 last month to 109.6 in March.
“Consumer Confidence increased to its highest level since the onset of the pandemic in March 2020,” says Lynn Franco, senior director of economic indicators at The Conference Board. “Consumers’ assessment of current conditions and their short-term outlook improved significantly, an indication that economic growth is likely to strengthen further in the coming months. Consumers’ renewed optimism boosted their purchasing intentions for homes, autos and several big-ticket items. However, concerns of inflation in the short-term rose, most likely due to rising prices at the pump, and may temper spending intentions in the months ahead.”
The Conference Board’s monthly Consumer Confidence Survey®, conducted for it by Nielsen, also revealed that consumers’ assessment of current conditions improved significantly in March. The percentage of consumers claiming business conditions are “good” increased from 16.1 percent to 18.5 percent, while the proportion describing them as “bad” fell from 39.7 percent to 30.5 percent. Consumers’ assessment of the labor market also improved. The share saying jobs are “plentiful” increased from 21.6 percent to 26.3 percent, while those claiming jobs are “hard to get” declined from 22.4 percent to 18.5 percent.
Consumers’ optimism about the short-term outlook improved considerably. The percentage of those expecting business conditions to improve over the next six months rose from 30.7 percent to 40.8 percent, while the proportion expecting business conditions to worsen declined from 17.7 percent to 11 percent. Consumers’ outlook regarding the job market was also more favorable. The share expecting more jobs in the months ahead increased from 27.4 percent to 36.1 percent, while those anticipating fewer jobs declined from 21.3 percent to 13.4 percent. Regarding short-term income prospects, 15.5 percent of consumers expect their incomes to increase in the next six months, up modestly from 14.8 percent in February. However, 13.3 percent expect their incomes to decrease, up slightly from 12.9 percent last month.
