Consumer confidence in the United States continued its downward trend in March, as indicated by the latest report from The Conference Board. The Expectations Index, which gauges consumers' short-term outlook on personal income and labor market conditions, experienced a notable decline, dropping 9.6 points to 65.2. This marks the lowest level in 12 years and falls below the 80-point threshold typically associated with impending recessions.
The Consumer Confidence Index also fell, decreasing by 7.2 points to 92.9, which is below the anticipated 94 according to economists surveyed by LSEG. This represents the index's lowest reading since January 2021. Senior economist Stephanie Guichard noted that consumer confidence has now declined for four consecutive months, indicating a shift from the stable range observed throughout 2022.
The report highlighted that only the assessment of current labor market conditions showed slight improvement, while evaluations of business conditions weakened. Consumers expressed increased pessimism about future business prospects and employment opportunities, with expectations for future income diminishing significantly.
The decline in confidence was largely driven by older consumers, particularly those over 55, while younger consumers under 35 showed increased confidence due to improved assessments of their current situations. Concerns about inflation significantly influenced consumer sentiment, with average 12-month inflation expectations rising from 5.8% to 6.2% in March. Consumers expressed worries about rising prices of essential goods and the impact of tariffs.
Additionally, plans for major purchases, such as homes and cars, decreased, while intentions to buy appliances and electronics rose, potentially as a reaction to anticipated price increases due to tariffs. Overall, the report reflects a growing sense of economic uncertainty among consumers, with inflation and trade policies being prominent concerns.