Consumer confidence plummets in March
Consumer confidence plummeted to a five-year low in March, according to a report released Tuesday, as Americans gloomily surveyed an economic landscape blighted by soaring energy costs, rising inflation, sinking house values and a downturn in the job market.
The Conference Board, a New York-based industry group, said its consumer confidence index dived to 64.5 in March, down dramatically from February’s 76.4 and significantly short of the 73.5 reading that many economists had been anticipating.
The Conference Board numbers, said Merrill Lynch economist David Rosenberg, "suggest that consumers are on the verge of the worst downturn since the 1970s."
The Federal Reserve’s interest rate cuts and pending tax rebates from the U.S. government "are proving no match for rocketing pump prices, intensifying real estate deflation, the worst financial crisis in decades and a deteriorating economic and employment backdrop," he said.
Consumer sentiment is an important indicator because it provides a key clue about future economic activity no fax payday loans. When jittery consumers begin to cut back on discretionary spending, demand for goods and services weakens across the economy.
The index hit its lowest level since March 2003, when Americans were unsettled by the U.S.-led invasion of Iraq. Except for that transient weakness five years ago, the index hasn’t been as low as it was this month since 1993.
Experts said Tuesday’s unexpectedly weak confidence report, while understandable in view of the recent drumbeat of negative financial news, offers more evidence that the U.S. economy probably can’t avoid a recession, if it hasn’t already entered one.
"If confidence stays at this level or moves even lower, real consumer spending and economic growth will slow even more, perhaps sharply," predicted Steven Wood of Insight Economics.
Filed under: money by Fred