The University of Michigan index fell to 59.7 points from 62.8 points in February. Analysts were expecting a less steep drop and were counting on 62.5 points.
US consumer confidence deteriorated further in March, now at its lowest level in more than 10 years due to unabated inflation and the war in Ukraine which is further clouding the outlook.
The index measuring confidence fell to 59.7 points from 62.8 points in February, according to the preliminary estimate of the University of Michigan survey released on Friday.
Analysts were expecting a less steep drop and were counting on 62.5 points.
“Consumer confidence continued to decline due to falling inflation-adjusted incomes, recently accelerated by rising fuel prices following the Russian invasion of Ukraine,” the statement said. Richard Curtin, the economist in charge of this very popular survey of the markets.
This is the third month of decline in a row.
A record proportion of consumers expect their personal finances to deteriorate over the coming year, and are particularly pessimistic regarding the economic outlook, “with the sole exception of the labor market”, he underlines.
In detail, in fact, the index measuring the outlook fell by 8.4% and fell to 54.4 points, while that measuring the current situation fell by 0.6%, to 67.8 points.
Richard Curtin also points to the fact that the strength of the labor market “comes at the cost of pushing inflation even higher”, due to “increased pressures on wages to respond to the continued growth of the demand”.
He compares the situation to the “game of musical chairs” and notes that “although everyone knows the game will end, everyone still wants to get the highest possible income before going out”, prompting Americans to change jobs more frequently.
Furthermore, “the biggest source of uncertainty is undoubtedly inflation and the potential impact of the Russian invasion of Ukraine. In the March survey, 24% of respondents spontaneously mentioned the invasion of Ukraine in response to questions regarding the economic outlook,” explains the economist.
Inflation in February was at its highest level in 40 years, with prices soaring 7.9% from February 2021, according to the Commerce Department’s CPI index released on Thursday.
