Consumer Sentiment Index Holds Steady in March
Economists surveyed by Bloomberg News had expected the index to drop to 73 in March. The index was at 73.6 in February, 74.4 in January, and 72.5 in December. The index hit a cycle low of 55.3 in November 2008; the index's record low of 51.7 was set in May 1980.
In March, the index of consumer expectations fell to 67.9 from February's 68.4 level, while the current economic conditions index rose to 82.4 from 81.8, Reuters reported.
Sentiment Continues To Meander
Richard Curtin, director of the surveys, said that after trending up initially, sentiment has leveled-off in the last two quarters.
"Following substantial gains from the recession lows of more than a year ago, sentiment has languished at those improved levels during the past six months, moving sidewards with only small variations," Curtin said, in a statement, Reuters reported.
Investors pay attention to consumer sentiment because rising sentiment usually precedes consumer decisions to buy, while falling sentiment indicates a likelihood that more people will hold off purchases -- and historically, consumer spending has accounted for more than two-thirds of U.S. GDP.
The University of Michigan's Consumer Survey Center questions 500 households each month on their financial conditions and attitudes about the economy.
Missing Ingredient: Job Growth
The bottom line regarding consumer sentiment as of March? Consumer sentiment remains substantially above levels recorded a year ago, but has meandered in recent months.
Consumers sense that the economy is recovering and that numerous sectors are doing better than a year ago -- as evidenced by the increase in corporate earnings and the stock market's rise -- but they also see the U.S. unemployment rate at an uncomfortably high 9.7%. The economy will need to register sustained job growth, several months in which 200,000 and then 225,000 jobs are created, etc., before consumers will feel more confident about both their personal financial situations and the nation's as a whole.