US consumer outlook hits 12-year low in March, confidence falls: TCB

Consumer confidence in the United States dropped in March, with The Conference Board Consumer Confidence Index falling by 7.2 points to 92.9 (1985=100). The Expectations Index, which gauges consumers’ short-term outlook for income, business, and labour market conditions, plunged by 9.6 points to 65.2, marking its lowest level in 12 years and falling well below the threshold of 80 that typically signals a potential recession. The Present Situation Index, which assesses current business and labour market conditions, declined more modestly by 3.6 points to 134.5.

The overall fall in confidence was driven largely by consumers over the age of 55, and to a lesser extent those between 35 and 55. In contrast, confidence among younger consumers under the age of 35 rose slightly, buoyed by improved perceptions of present conditions, even though their expectations for the future dimmed. The decline in sentiment was broad-based across income groups, with the exception of households earning over $125,000 annually, who reported a marginal increase in confidence, TCB said in a release.

Despite the deteriorating outlook, the share of consumers anticipating a recession in the next 12 months held steady at a nine-month high. Expectations regarding interest rates also shifted: 54.6 per cent of consumers now expect interest rates to rise over the next year, up from 52.6 per cent in February, while the proportion expecting rates to fall dropped to 22.4 per cent from 24.1 per cent.

Assessments of the current business climate deteriorated in March. The percentage of consumers describing business conditions as ‘good’ fell to 17.7 per cent from 19.1 per cent in February, while those saying conditions were ‘bad’ rose to 16.6 per cent from 14.8 per cent.

Views of the labour market showed slight improvement, with 33.6 per cent of consumers saying jobs were ‘plentiful,’ unchanged from February, and those reporting jobs were ‘hard to get’ falling slightly to 15.7 per cent from 16.0 per cent.

Expectations for the coming six months worsened. The percentage of consumers expecting business conditions to improve fell to 17.1 per cent from 20.8 per cent, while those anticipating worsening conditions rose to 27.3 per cent from 25.5 per cent. The labour market outlook followed a similar trend: 16.7 per cent of consumers expect more jobs to be available, down from 18.8 per cent in February, while 28.5 per cent expect fewer jobs, up from 26.6 per cent. Income expectations also darkened, with 16.3 per cent of consumers expecting their income to increase, down from 18.8 per cent, and 15.5 per cent expecting a decrease, up from 12.8 per cent.

Inflation remains a key concern for consumers, according to write-in responses collected by the Conference Board. There was an uptick in mentions of trade policies and tariffs, and a noticeable rise in references to economic and policy uncertainty.

A special survey question found that while many consumers feel confident assessing their own future financial situation—over 45 per cent reported finding it easy to predict their future income and household finances—many struggled to form expectations about broader economic trends. Over one-third found it difficult to assess future employment and business conditions, and 38.8 per cent reported difficulty in predicting inflation.

“Consumer confidence declined for a fourth consecutive month in March, falling below the relatively narrow range that had prevailed since 2022. Of the Index’s five components, only consumers’ assessment of present labour market conditions improved, albeit slightly,” said Stephanie Guichard, senior economist, Global Indicators at The Conference Board.

“Meanwhile, consumers’ optimism about future income—which had held up quite strongly in the past few months—largely vanished, suggesting worries about the economy and labour market have started to spread into consumers’ assessments of their personal situations,” Stephanie added.

ALCHEMPro News Desk (HU)