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March Consumer Confidence Drops After Feb. High

It’s the first economic statistic to show the pandemic’s impact. Total Consumer Confidence dropped to 120 from 132.6, but the future-expectations measurement fell 20 points. A senior economist calls it “more in line with a severe contraction rather than a temporary shock.”

NEW YORK – The Conference Board Consumer Confidence Index® declined sharply in March, following an increase in February. It’s the first economic indicator covering a timeframe that includes the COVID-19 pandemic.

The complete Index fell to 120.0 compared to 132.6 in February. However, the Present Situation Index – a gauge of consumers’ assessment of current business and labor market conditions – decreased only marginally from 169.3 to 167.7.

The Expectations Index – a gauge of consumers’ short-term outlook over the next six months for income, business and labor market conditions – declined almost 20 points, from 108.1 last month to 88.2 this month.

“Consumer confidence declined sharply in March due to a deterioration in the short-term outlook,” says Lynn Franco, senior director of economic indicators at The Conference Board. “The Present Situation Index remained relatively strong, reflective of an economy that was on solid footing, and prior to the recent surge in unemployment claims. However, the intensification of COVID-19 and extreme volatility in the financial markets have increased uncertainty about the outlook for the economy and jobs.

“March’s decline in confidence is more in line with a severe contraction – rather than a temporary shock – and further declines are sure to follow,” she says.

Current conditions: Consumers’ assessment of current conditions was less favorable in March. The percentage of consumers claiming business conditions are “good” was relatively unchanged at 39.6%, while those claiming business conditions are “bad” increased from 10.8% to 11.4%.

Consumers’ assessment of the job market also moderated from last month. Those saying jobs are “plentiful” decreased from 46.5% to 44.9%, while those claiming jobs are “hard to get” was unchanged at 13.9%.

Future conditions: Consumers were significantly less optimistic about the short-term outlook. The percentage of consumers expecting business conditions to improve over the next six months decreased from 20.6% to 18.2% – but those expecting business conditions to worsen increased from 7.2% to 14.9%.

Consumers’ outlook for the labor market was also less positive. The proportion expecting more jobs declined from 16.6% to 15.5%, while those anticipating fewer jobs in the months ahead increased, from 12.0% to 17.1%.

Regarding short-term income prospects, the percentage of consumers expecting an increase declined from 22.7% to 20.7%, while the proportion expecting a decrease rose from 6.1% to 8.8%.

The monthly Consumer Confidence Survey is conducted for The Conference Board by Nielsen, a global provider of information and analytics around what consumers buy and watch. The cutoff date for the preliminary results was March 19, 2020.

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