Consumer confidence plunges to 16-year low
NEW YORK–United States consumer confidence fell further into recessionary territory in March, hitting a 16-year low, even as other data showed incomes rose and inflation dipped in February, which should support the Fed’s efforts to bolster the economy.
A final index of confidence from the Reuters/University of Michigan Surveys of Consumers fell to 69.5 in March from 70.8 in February. The new reading was the lowest since February 1992.
Consumers were apparently unimpressed by February’s 0.5 per cent rise in personal incomes, reported yesterday by the U.S. commerce department. Analysts polled had predicted a 0.3 per cent gain.
The report also showed only a 2 per cent rise year over year in the "core" personal consumption expenditure price index, just within the Federal Reserve board’s perceived comfort zone for inflation.
"It argues that the Fed can lower rates in the months ahead," said Zach Pandl, economist at Lehman Brothers in New York.
The commerce department’s report also showed signs of economic weakness, with personal spending increasing just 0.1 per cent in February creditreport.
This was in line with expectations but was down from a 0.4 per cent gain in January.
The weakness found was consistent with the Reuters/University of Michigan Surveys of Consumers report, which said "it is now nearly unanimous among consumers that the economy has already entered a recession."
The survey’s index of consumer expectations fell to 60.1, the lowest since January 1992, when it was at 59.1.
The final reading on one-year inflation expectations jumped to 4.3 per cent in March from 3.6 per cent in February.
That was the highest final reading since October 2005, when gasoline prices were soaring in the wake of Hurricane Katrina, but was down from the preliminary March reading of 4.5 per cent.
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