Consumers Show Muted Optimism

Confidence Slips in March as Consumers React to Economic Conditions

Don Hogsett, April 9, 2007

Rattled by the near-term prospects for the U.S. economy with financial markets dipping and gas prices climbing higher, consumer confidence slipped in March by 3.6%, more than wiping out all of the modest gains of the two previous months, The Conference Board reported.

The widely watched bellwether of consumer spending, the principal driver of the U.S. economy, fell to a reading of 107.2 from 111.2 in February, but still remains well ahead, by 7.0%, of a 13-month low of 100.2 last August.

Confidence fell in most regions of the nation, led by a steep 18.7% drop in New England states. The only gains recorded were in the East South Central states, up 16.9% and Mountain states, up 1.1%.

Moving in lock step with confidence, buying plans fell across the board, with plans to buy a home off 5.9%; car-buying plans down 5.5%; plans to buy a major appliance down 2.8%; and plans to buy a carpet off 10.6%.

"Apprehension about the short-term future has suddenly cast a cloud over consumers' confidence," said Lynn Franco, director of The Conference Board's Consumer Research Center. "Despite diminishing expectations, consumers' assessment of present-day conditions remains steady and does not suggest a weakening in economic conditions."

Franco added, "The recent turmoil in financial markets, coupled with the run-up in gasoline prices, may have contributed to consumers' heightened sense of uncertainty and concern. The direction of both components over the next few months bears watching to determine whether this decline is just a bump in the road or something more substantial."

Confidence by Region

Region % Change
Source: The Conference Board
New England -18.7%
Middle Atlantic -2.8
East North Central -11.5
West North Central -6.9
South Atlantic -11.8
East South Central 16.9
West South Central 0.0
Mountain 1.1
Pacific 0.0

Buying Plans March
Plans to purchase over the next six months

Source: The Conference Board
Homes -5.9%
Carpets -10.6
Cars -5.5
Major appliances -2.8
Vacations -11.7

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