If you were wondering whether the second-largest bank failure in American history and fears of nationwide bank runs undermined consumer confidence in March, the answer is apparently “No, not really.”
I suppose you could suggest we should wait a month before we declare consumers unconcerned, but the cutoff data for responses to the Conference Board survey was March 20, almost two weeks after SVB failed.
At 104.2, the headline print was ahead of every estimate. And there were 60 of them — estimates, I mean. The highest guess was 104. The lowest was 95 (you can go ahead and replace that person with AI).
February’s headline was revised higher, to 103.4.
The figures “support a narrative of near-term spending strength, but higher borrowing costs and reduced access to credit are major headwinds while falling house prices and the potential restart of student loan repayments are additional challenges,” ING’s James Knightley wrote.
To be sure, Americans aren’t exactly exuberant. “For 12 of the last 13 months, the Expectations Index has been below 80, the level which often signals a recession within the next year,” Ataman Ozyildirim, senior director of economics at The Conference Board said Tuesday.
The expectations gauge improved but, as Ozyildirim noted, it’s still subdued at 73. The present situation index dropped to 151.1 from 153.
Consumers’ assessment of the labor market worsened at the margins, and Americans’ outlook for price growth is still very bad. Year-ahead inflation expectations stood at 6.3% in March, according to Tuesday’s release.
As far as spending intentions, consumers plan to spend more on health care, home maintenance and entertainment, including streaming. But, in a potential boon for the Fed’s efforts to curb services sector inflation, consumers plan to spend less on amusement parks, movie tickets, hotels and dining.
The Conference Board also said Americans indicated they’ll cut spending on lottery tickets. Or, put differently, low-income Americans plan to give themselves a tax cut.
Readers with a quant bent and time to do so might look for or calculate the correlation between consumer sentiment surveys and consumer spending. Unless things have dramatically changed, the predictive value of sentient surveys historically was quite low.
LOL I thought the same thing. Seems aspirational. I too plan on more wellness spending and less dining out
You may have seen a note from the Fed today about pricing for housing. Here’s a look at the headline: Short-Term Home Price Expectations Drop Sharply. At least that is encouraging in regard to inflation pressure, and it’s the kind of trend I want to see.
The sooner there may be broad-based pricing moderation, the sooner we can imagine getting away from inflationary influences and processes and return to regular market processes. It ain’t going to happen any time soon. But the more we see this sort of thing, the better.