American Consumers Concerned About Economy

American Consumers Concerned About Economy

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American Consumer Confidence declined in 1-H of March as lower-income Americans grew concerned about prospects for the US economy and higher gasoline prices.

The University of Michigan’s preliminary sentiment index fell to a 5-month low of 90 from to 91.7 in February.

The median projection in a survey of economists called for 92.2. The group’s measures of year-ahead and longer-term inflation expectations picked up.

The fall in confidence this month was among households at the bottom end of the income scale as prices at the gasoline pump moved higher.

At the same time, the report showed stronger labor market conditions are underpinning Americans’ expectations that pay gains will follow suit.

The MSI report corroborates the weekly Consumer Comfort Index which has held in a narrow range this year. The report’s monthly gauge of expectations about the economy also eased in March to a 5-month low.

The Michigan measure of current conditions, which takes stock of Americans’ view of their personal finances, dropped this month to 105.6, the lowest since November, from 106.8 in February.

The gauge of expectations for the next 6 months decreased to 80, the weakest in 6 months, from 81.9 in February.

Households expected the inflation rate over the next year will be 2.7%, up from 2.5% in the 1st 2 months of this year.

Respondents expect an almost $1 increase in a gallon of gasoline in the next 5 years, almost 2X as high as in January. Prices at the pump advanced to 1.96 gal in mid-March from a seven-year low of 1.70 in February, according to the motoring group AAA.

Recent reports have shown that price pressures are starting to stir.

A core measure of consumer prices, which strips out food and fuel, rose 2.3% from February 2015, the most since May 2012, data from the US Labor Department showed Wednesday.

Buying conditions declined this month, the Michigan report showed. Consumers avorable mentions of low prices for big-ticket items fell, with those for vehicles dropping to the lowest level in 15 years.

The Michigan data also showed that 39% of households reported that their incomes had recently increased. With inflation low, the fewest consumers since Y 2008 anticipated price-adjusted income declines in the year ahead.

A healthy labor market has been a catalyst underpinning sentiment.

Friday, the US major stock market indexes finished higher at: DJIA +120.81 at 17602.30, NAS Comp +20.66 at 4795.63, S&P 500+8.97 at 2049.56.

Volume: Quad Witching Day trade was heavy, with over 2.15-B/shares exchanged on the NYSE.

S&P 500 (+0.4%) extended its winning streak to 5 weeks entering positive territory: YTD, at  +0.3%.

Have a terrific weekend.

HeffX-LTN

Paul Ebeling

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