Consumer spending may be flat but not consumer confidence which jumped to 101.3 in March from an upwardly revised 98.8 in February. March’s reading is close to January’s 7-1/2 year high of 103.8.
March’s gain is centered entirely in the expectations component which is up 6.0 points to 96.0. This is the best reading for this component since February 2011 and reflects expected gains in income and the jobs market.
A negative, however, is the present situation component which fell 3.0 points to 109.1. Weakness here reflects a slight rise in the jobs-hard-to-get reading, which is a marginally negative indication for Friday’s March employment report, and also a rise in those describing current business conditions as bad. Still, those describing conditions as bad, at 19.4 percent, are well outnumbered by those describing conditions as good, at 26.7 percent.
But there is another negative in today’s report and that’s a sizable downtick in those planning to buy a house in the next six months, offset in part by a rise in car buying plans. Inflation expectations rose 2 tenths to 5.2 percent reflecting the current rise in gas prices. Still, 5.2 percent is low for this reading.
Though the drop in the present situation component does point to weakness in consumer activity relative to February, readings in this report are mostly favorable, and decidedly favorable. The strength of the jobs market has yet to trigger a surge in consumer spending but it is giving a definitive boost to consumer spirits.