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Consumer Confidence Reverses Negative Course

rising-arrowsAfter plummeting in February due to a slow economic start to the year, consumer confidence turned in the other direction for March, according to data released by the Conference Board on Tuesday.

Whereas pessimism among consumers reigned in February’s report, March’s data showed signs that attitudes toward the economy are slowly improving after enduring such headwinds to start the year as lingering effects of the strong dollar and low oil prices. The Conference Board’s Consumer Confidence Index increased up to 96.2 (1985=100) in March from February’s reading of 94.0 and the Consumer Expectations Index jumped from 79.9 to 84.7 over-the-month in March.

“Consumer confidence increased in March, after declining in February,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers’ assessment of current conditions posted a moderate decline, while expectations regarding the short-term turned more favorable as last month’s turmoil in the financial markets appears to have abated. On balance, consumers do not foresee the economy gaining any significant momentum in the near-term, nor do they see it worsening.”

The share of consumers expecting business conditions to improve in the next six months rose from 14.5 in February to 15.0 percent in March while the percentage expecting business conditions to get worse over the same period declined from 11.6 percent to 9.2 percent, according to the Conference Board.

“On balance, consumers do not foresee the economy gaining any significant momentum in the near-term, nor do they see it worsening.”

Lynn Franco, The Conference Board

The labor market situation also improved in February as 242,000 jobs were added during the month following January’s disappointment, and the unemployment rate stayed below 5 percent, according to the Bureau of Labor Statistics. In the Conference Board data, consumer outlook for the labor market experienced a corresponding increase. The share of consumers anticipating more jobs in the next six months ticked up from 12.2 percent to 2.9 percent from February to March while the share of consumers who expect fewer jobs declined slightly from 17.7 to 17.2 percent. The share of consumers who expect their income to increase in the next six months inched up from 11.6 in February to 11.8 percent in March.

The Conference Board's Present Situation Index dropped slightly from February to March, from 115.0 to 113.5, as the share of consumers who said they believe that business conditions are "good" declined from 26.0 percent down to 24.9 percent.

In Fannie Mae’s March Economic Outlook, analysts noted the factors that have created a drag on the U.S. economy such as "weakness in net exports and oil-related nonresidential investment as well as the ongoing inventory correction process after unsustainable accumulations during the first half of 2015.” At the same time, they pointed out that the positives in the economy such as strengthening domestic consumer and business spending and a healthy labor market, should outweigh those negative factors.

Fannie Mae’s report noted that stocks have recovered from February lows to near their highest level this year, credit spreads have narrowed, and oil prices have climbed. Meanwhile, the economy gained some footing after a fourth quarter slowdown during which real gross domestic product (GDP) grew at an annualized rate of just 1.4 percent.

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.
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