Consumers’ Confidence in Economy Slips in March

Americans’ confidence in the economy slipped in March, and prospects for future months dimmed as well, data showed Tuesday, but both gauges stuck close to recent months’ high levels.

The Conference Board reported that its overall index of consumer confidence fell to 118.5 points in March from a revised 118.9 in February--the highest level in almost eight years. Last month’s index was originally reported as 118.4.

Some economists had expected a reading of 117.7 for the March consumer confidence index.

Meanwhile, the index measuring consumer expectations over the next six months slid half a point, the New York-based research group said.

“The message from consumers is that both business and employment conditions will remain upbeat through the spring and the summer,” said Lynn Franco, associate director at the Conference Board’s Consumer Research Center.

Tuesday’s reports came as the Federal Reserve Board voted to raise overnight borrowing costs for banks by a quarter point to 5.50%.

In the bond market, the yield on the benchmark 30-year U.S. Treasury bond rose to 6.97% from 6.92% on Monday. Stocks were lower, with the Dow Jones industrial average falling 29.08 points to close at 6,876.17.

Looking ahead, analysts expect consumer confidence to remain high, which means Americans will continue to spend, pushing economic growth this quarter and next above the 2.5% pace Fed policymakers consider noninflationary.

“The trajectory on consumer spending is not down. If anything, it’s up,” said Tim O’Neill, chief economist at Harris Bank/Bank of Montreal in Chicago. “That’s the real problem. If consumer spending continues at current levels, that’s consistent with growth in the economy way above potential.”

The Conference Board reports suggest consumers are less upbeat about their financial prospects. Fewer respondents expect their incomes to rise over the next six months, and the indexes measuring consumers’ plans to buy a home fell. However, the number of consumers planning to buy automobiles rose, while the number planning to buy major appliances fell.

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Consumer Confidence

From a monthly survey of 5,000 U.S. households. Index: 1985=100. March 118.5

Source: Conference Board