Consumers are less confident about the future state of the U.S. economy, according to new data released Tuesday morning.
The Conference Board's Consumer Confidence Index for March was 104.7, little changed from February's revised reading of 104.8, but below the 107 expected by economists.
The “Current Situation Index,'' which measures consumers' evaluation of current business and labor market conditions, was 151 in March, up from 147.6 in February.
However, the “expectations index,'' which measures consumers' short-term outlook regarding income, businesses, and labor market conditions, fell to 73.8 in March from 76.3 the previous month. Historically, a reading below 80 in this category signals a recession next year.
“Consumers' assessment of the current situation improved in March, but they became more pessimistic about the future,” said Dana Peterson, chief economist at the Conference Board.
“Confidence among consumers 55 and older has increased, but confidence among those under 55 has deteriorated,” Peterson said. “Separately, consumers in the $50,000 to $99,999 income group reported a decline in confidence in March, while confidence improved slightly in all other income groups.”
“However, over the past six months, confidence has remained flat, with no real trend upward or downward by income or age group.”
Economists largely ignored the pessimism. In response to the data, Ryan Sweet, chief U.S. economist at Oxford Economics, wrote that the March drop does not change his forecast for consumer spending this quarter.
“The relationship between consumer sentiment and real consumer spending is loose, especially in the short term,” he said. “Changes in sentiment typically explain little of changes in real consumption. Rather, the labor market, real disposable income, and household net worth are more important.”
Tuesday's figures come ahead of key inflation figures due later this week. The government will release the Personal Consumption Expenditure Price Index on Friday as investors look to updates on “core” PCE growth, the Federal Reserve's preferred measure of inflation.
alexandra canal I'm a senior reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, Email alexandra.canal@yahoofinance.com.
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