Consumer sentiment fell steeply in March but less steeply in the latter part of March, which is about the only good news in a sobering consumer sentiment report. The final March reading came in at 67.5 vs 68.2 at mid-month, which implies a 66.8 reading in the latter part of the month. The degree of decline from 68.2 to 66.8 is much less severe than the decline from February's final reading of 77.5 to mid-month's 68.2.
Expectations, the leading component of the index, sagged in the final reading to 57.9 from a mid-month 58.3. Current conditions fell a little more than one point to 82.5. These readings are among the weakest of the recovery especially the expectations index which is down 10 points from March last year.
Inflation expectations didn't worsen in the latter part of the month which is good news, but they remain significantly heightened from February. One-year expectations are 4.6 percent, up from 3.4 percent last month, with five-year expectations at 3.2 percent, up from 2.9 percent.
These results reflect the greater turmoil in Libya as well as the Middle East and, of course, reflect the crisis in Japan. The report warns strongly that consumers are concerned that high gas and food prices will hurt their incomes, in fact it notes that the fewest consumers in more than 50 years expect their income to increase. Tuesday's Conference Board report on consumer confidence will offer detailed assessments on income expectations and on the March jobs market and whether the drop in jobless claims is having an effect on their outlook. Today's report is having little initial reaction in the markets.
Market Consensus before announcement
The Reuter's/University of Michigan's Consumer sentiment index or mid-March showed a dramatic drop to 68.2 from the February final reading of 77.5. The drop was even more notable given that the second half of February was very strong (based on implied numbers) due to moderate improvement in the job market. Mid-March weakness was centered in the leading component, the expectations index which plunged 13.3 points to 58.3. This indicates that consumers are less optimistic about where the economy is headed. The current conditions subcomponent of consumer sentiment held up better than expectations, slipping only 3.3 points to 83.6 from the February final reading of 86.9.