The rebound in the Conference Board's measure of consumer confidence to 101.3 in March, from 98.8, should reassure those worried that households haven't yet spent their savings stemming from the slump in gasoline prices. The delay appears to be weatherrelated.
Aside from the 103.8 reading in January, the 101.3 figure for March was an eight-year high and was also well above the long-term average of 90.7. The rebound in the headline index was driven by a recovery in the expectations index to 96.0, from 90.0, which leaves it at a level that historically has been consistent with real consumption growth of about 4% annualised. The only disappointment is that the present situation index fell back slightly to 109.1, from 112.1.
The strength of confidence, along with improving labour market conditions, indicates that real consumption growth will accelerate over the coming months.
"While real consumption growth will probably come in slightly below 2% annualised in the first quarter, all the conditions are in place for a sizeable acceleration in the second quarter to around 4%. Households still have their savings from lower gasoline prices to spend and robust labour market conditions should translate into further solid gains in incomes." - said Capital Economics in a report on Tuesday
