Unexpected bump in consumer confidence a mixed blessing

WASHINGTON — The Conference Board Consumer Confidence Index showed a positive bump in March, despite price increases at the gas pump and overall inflation fears. However, there is growing concern for the future.

Although the increase can be tied to the very tight labor market and consumer’s confidence about their ability to find jobs, consumers are well-aware of the potential for inflation to rise — as much as 7.9%, according to the Conference Board.

The furniture industry should take note that consumers’ desire to spend on big-ticket items has softened as well due to interest rate increases. And, even though the confidence numbers reflect a slight positive increase, as consumers grapple with the costs of food, gas and shelter they are slowing spending on home furnishings and other discretionary items.

The Index now stands at 107.2 (1985=100), up from 105.7 in February. The Present Situation Index which is based on consumers’ assessment of current business and labor market conditions, improved to 153.0 from 143.0 in February. The Expectations Index — based on consumers’ short-term outlook for income, business, and labor market conditions — declined to 76.6 from 80.8.

“Consumer confidence continues to be supported by strong employment growth and thus has been holding up remarkably well despite geopolitical uncertainties and expectations for inflation over the next 12 months reaching 7.9%, an all-time high. However, these headwinds are expected to persist in the short term and may potentially dampen confidence as well as cool spending further in the months ahead,” said Lynn Franco, senior director of economic indicators at The Conference Board.

Current conditions- not so bad

Consumers’ appraisal of current business conditions improved: 19.6% of consumers said business conditions were “good,” up from 17.6%, and 22.1% of consumers said business conditions were “bad,” down from 25.1%.

For the same period, consumers’ assessment of the labor market was positive: 57.2% of consumers said jobs were “plentiful,” up from 53.5%. This is a new historical high, showing the tight labor market with only 9.8% of consumers saying jobs are “hard to get,” down from 12.0%.

Six months ahead- growing concern

Consumers expect business conditions to deteriorate while labor prospects are mixed: 18.7% expect business conditions will improve, down from 21.3%, while 23.8% expect business conditions to worsen, up from 19.9%.

For the short-term labor market 17.4% of consumers expect more jobs to be available in the months ahead, down from 19.4% and 17.7% anticipate fewer jobs, down from 19.6%.

In terms of consumer’s own financial prospects for the next six months, consumers were slightly positive with 14.9% of consumers expecting their incomes to increase, up from 14.7% and 13.7% expecting their incomes will decrease, up from 13.0%.

The monthly Consumer Confidence Survey, based on an online sample, is conducted for The Conference Board by technology company Toluna. The cutoff date for the preliminary results was March 23.

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