Consumers are confident. Extremely confident. The economic news might have been expected to be weak considering eight straight days of a drop in the Dow Jones Industrial Average. Apparently consumers did not get the memo that some enthusiasm needs to be tempered. This actually looks to be the strongest consumer confidence reading since 2000.
The Conference Board released its monthly Consumer Confidence Index for March, showing a sharp gain on top of what had already been strong readings. The index rose to 125.6 in March, handily higher than the 116.1 reading in February. February’s level had been revised higher than the initial 114.8 reading.
Bloomberg was calling for slight drop down to 113.8, and the Econoday range of estimates was 110.0 to 118.0.
The strength in consumer confidence was higher in the current data and in the expectations. Tuesday’s report showed that the Present Situation Index rose from 134.4 in February to 143.1 in March. A similar gain was seen in the Expectations Index, rising from 103.9 in February to 113.8 in March.
What makes Tuesday’s report so interesting is that it comes on the heels of eight straight days of stocks closing lower. That was a trend not seen since 2011, but the markets are still quite close to all-time highs.
Unusual strength in confidence readings has been the standout feature of the post-election economy. The consumer confidence index has yet to slow, pressing to new cycle highs in February as the spread between optimists and pessimists continued to widen. The March consensus for the consumer confidence index is 113.8 in what would be only a small downtick from February’s 114.8.
Consumers’ appraisal of current conditions improved considerably in March. Consumers were also significantly more optimistic about the short-term outlook. It also turns out that the consumer outlook for the labor market was also more upbeat in March. These readings were quantified as follows:
- The percentage saying business conditions are “good” increased from 28.3 percent to 32.2 percent.
- Those saying business conditions are “bad” decreased from 13.4 percent to 12.9 percent.
- The percentage of consumers stating jobs are “plentiful” rose from 26.9 percent to 31.7 percent.
- Those claiming jobs are “hard to get” decreased moderately, from 19.9 percent to 19.5 percent.
- The percentage of consumers expecting business conditions to improve over the next six months increased from 23.9 percent to 27.1 percent.
- The percentage of consumers expecting business conditions to worsen declined from 10.5 percent to 8.4 percent.
- The proportion expecting more jobs in the months ahead increased from 20.9 percent to 24.8 percent.
- The proportion expecting fewer jobs declined from 13.6 percent to 12.2 percent.
- The percentage of consumers expecting their incomes to increase improved from 19.2 percent to 21.5 percent.
- The percentage of consumers expecting a decrease declined from 8.1 percent to 7.0 percent.
Lynn Franco, Director of Economic Indicators at the Conference Board, said of March’s huge boost in consumer confidence:
Consumer confidence increased sharply in March to its highest level since December 2000. Consumers’ assessment of current business and labor market conditions improved considerably. Consumers also expressed much greater optimism regarding the short-term outlook for business, jobs and personal income prospects. Thus, consumers feel current economic conditions have improved over the recent period, and their renewed optimism suggests the possibility of some upside to the prospects for economic growth in the coming months.
Stocks reacted positively to the news of consumer confidence blowing away expectations. The Dow and the S&P 500 both went from slight drops to modest gains.