BLBG: U.S. Michigan Consumer Sentiment Index Rose to 57.3 in March
Confidence among U.S. consumers held in March near the lowest level in three decades as job losses mounted.
The Reuters/University of Michigan final index of consumer sentiment rose to 57.3 from 56.3 in February. The gauge, which has averaged 112 over the last three decades, reached a 28-year low of 55.3 in November.
Rising unemployment raises the risk that recent gains in consumer spending will be short-lived, extending the recession though much of 2009. A lack of confidence would mean consumers boost savings, eliminating any lift spending would have received from the tax cuts passed under President Barack Obama’s stimulus plan.
“Consumers are in constant fear that the next jobs lost might be their own,” Maxwell Clarke, chief economist at IDEAglobal in New York, said before the report. “Until these fears subside, there is little promise of improvement on the consumption front.”
Economists forecast the final sentiment measure would rise to 56.8, according to the median of 57 projections in a Bloomberg News survey. Estimates ranged from 55 to 60. A preliminary March reading earlier this month came in at 56.6.
Growth in spending by American consumers slowed in February and incomes fell more than forecast, reflecting the toll of a deteriorating job market, a report from the Commerce Department showed. Purchases advanced 0.2 percent after climbing 1 percent in January, with much of the gain due to an increase in prices that left so-called real spending down for the month.
“We are concerned that the rapid deterioration in the labor market could lead to renewed weakness in consumer spending and confidence in the relatively near term,” Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York, said in a note to clients before the report.
Therefore, next week’s employment report “will be of particular significance,” he said. Payrolls probably declined by more than 600,000 workers in March for a fourth month, and the jobless rate may have climbed to 8.5 percent, the highest level in 25 years, according to the median estimate of economists surveyed.
