The year so far has seen rising inflation, financial institution collapses, and a possible recession. Despite two straight months of decline in consumer confidence levels, March saw an increase – suggesting that the country still remains optimistic about its economic possibilities.
After a slowdown in recent months, consumers have slowly regained confidence. The Conference Board’s survey revealed on March 28 that its consumer confidence index rose to 104.2 this month — representing an uptick from February’s 103.4 score and indicating a revival of hope.
The board noted, however, that despite the uptick in confidence, the index is still currently sitting just a little below 2022’s average level of 104.5.
The business research group’s situation index indicates that people’s perceptions of the business and employment climate have weakened marginally, with the present index dropping by 1.9 points from last month, according to a report from a leading research group.
The board’s expectations index — a measure of consumers’ six-month outlook for income, business and labor conditions — rose in March to 73 from 70.4 in February. For context, readings below 80 indicate potential recession in the near future – according to The Conference Board – however, this recent increase provides hope for a resilient recovery ahead of us.
In the wake of recent banking collapses, public confidence in U.S. financial institutions has plummeted to an alarming 10% according to a poll conducted by AP-NORC – less than half as high when compared with 2020’s 22%. The board’s survey, which ran up until March 20th, did not specifically address bank practices but reveals how quickly our perspectives can shift in accordance with world events.
Despite the Federal Reserve’s nine consecutive rate hikes over the last year, consumer spending remains resilient and continues to energize America’s economy. The continued high inflation has caused borrowing costs to rise – making it more expensive for consumers when taking out a loan or using credit cards – but this hasn’t stopped them from keeping demand alive in what is traditionally seen as an economic engine of growth.
Consumer confidence surrounding inflation is still strong, but that doesn’t mean people aren’t being cautious about big ticket purchases. While plans for major appliances have dropped slightly, the board report showed a mild uptick in car buying intentions.
The latest poll conducted by the board revealed that in spite of a difficult economy, consumers are still looking to invest more heavily in services such as health care, tax preparation, and home maintenance. Though spending was significantly reduced for categories like amusement parks, movies, lodging and dining out, investments made towards necessities such as auto upkeep were boosted.
Despite the Federal Reserve’s multiple rate hikes in the past 12 months, U.S. job prospects have remained strong. Nevertheless, according to a recent survey conducted by The Conference Board, Americans are displaying signs of cautious optimism.
The percentage of respondents indicating they plan to purchase a home in the next six months held at 5.4%, the lowest level since August of 2022.
Home buying has become more unaffordable with average mortgage rates at 6.42%, leaving many potential homebuyers on the sidelines due to added costs of hundreds of dollars per month in loan payments.
After a hot housing market continued to rise for years, last year’s big rise in mortgage rates cooled the housing market. Before a February surge of 14.5%, sales of existing homes had fallen for 12 straight months to the slowest pace in over 12 years.
Source: Transport Topics
