Consumers’ Optimism Holds Steady in March

Consumer confidence was little changed in March following a sharp rise the month before amid recent indications that the economy is gaining steam.

The Conference Board said Tuesday that its index of consumer confidence was 97.7 for March, slightly below February’s revised reading of 98.0 but well above the 88.4 reached in January. Wall Street analysts had expected the index to be unchanged to slightly higher.

“We did not give back any of the bounce we saw in February,” said Stephen S. Roach, chief economist at Morgan Stanley & Co. “It suggests the economy is holding up fine.”

Separately, the Labor Department released data that show the prices U.S. businesses paid for imported goods fell 0.5% in February as petroleum imports dropped.

The overall decline in prices, the first since October, resulted from a 5.6% plunge in petroleum import prices. In January, petroleum imports rose a revised 5.0%, earlier reported as a 5.5% increase.

Excluding petroleum, February import prices were unchanged.

As the index of consumer confidence was released Tuesday morning, Federal Reserve Board officials were meeting in Washington to set interest rate policy. They decided later in the day to leave rates unchanged.

The Fed has been easing rates recently to give the economy a boost, since lower rates translate into lower borrowing costs, which tends to stimulate investment, hiring and overall economic activity. Recent data, however, have suggested the economy is already strengthening.

Three weeks ago, a report that the economy created 705,000 jobs in February caught economists and others by surprise. Since then, signs of strength in the housing market have also suggested improvement.

The consumer confidence index is based on a monthly survey of 5,000 U.S. households. Results of the survey suggested that despite the recent data, consumers remain somewhat concerned about job prospects.

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Consumer Confidence

Index from a monthly survey of 5,000 households. 1985=100

March 1996: 92.8

Source: Conference Board