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Decline in consumer expectations in March

In March, there is a continuation of the decline in consumer confidence, according to a new report that shows one index of short-term consumer expectations has fallen to its lowest level in 12 years.

The Conference Board's expectations index, which measures consumers' short-term outlook for personal income, as well as business conditions and labor market conditions, dropped by 9.6 points to 65.2 — the lowest level in the last 12 years and well below the threshold of 80 that typically signals an approaching recession.

The consumer confidence index in March decreased by 7.2 points to 92.9, less than the 94 predicted by economists surveyed by LSEG. This is the lowest value for the index since January 2021.

'In March, consumer confidence fell for the fourth consecutive month and moved out of the relatively narrow range that prevailed since 2022,' said Stephanie Gimbard, senior economist, global indicators at The Conference Board.

'Of the five components of the index, only the assessment of current labor market conditions improved, albeit marginally,' Gimbard noted. 'Assessments of current business conditions weakened nearly to neutral levels. Consumer expectations were particularly gloomy, with increased pessimism regarding future business conditions and declining confidence in future employment opportunities to a 12-year low.'

'Meanwhile, consumer optimism regarding future earnings, which has held relatively steady over the past few months, has largely disappeared, suggesting that concerns about the economy and the labor market have begun to spill over to consumers' assessments of their personal situations,' she added.

Decline in consumer confidence spread across all income groups

The Conference Board report noted that the decline in confidence was widely evident among consumers aged 55 and older and to a lesser extent among those aged between 35 and 55. Confidence improved among consumers under 35, as their improved assessments of their current situation outweighed more pessimistic expectations.

The decline in confidence was notable across all income groups, except for households with annual incomes above $125,000.

Average inflation expectations for the next 12 months rose again — from 5.8% in February to 6.2% in March, with The Conference Board noting that 'consumers are still concerned about high prices for essential household items such as eggs and the impact of tariffs.'

Reduction in plans for significant purchases

Plans for major purchases, such as homes and cars, have decreased over the past six months, although plans to purchase other expensive items, such as appliances and electronics, have increased — likely due to consumers wanting to buy before expected price increases due to tariffs.

The Conference Board noted that respondents to its survey who wrote their responses commented on the policies of the Trump administration and expressed concerns about inflation and the impact of the trade war on prices.

'Comments regarding the current administration and its policies, both positive and negative, dominated among consumers' responses regarding the conditions shaping their opinions about the economy. Responses also indicated that inflation remains a serious concern for consumers and that not enough is being said about concerns regarding the impact of trade policies and tariffs in particular. There were also more references than usual to uncertainty about policy and the economy,' the report stated.