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Economists surveyed by Bloomberg projected the March measure would fall to 67,5.
Concern mounted that sweeping cuts in planned government spending may hinder the expansion and limit recent progress in the labour market. At the same time, record stock prices and a housing rebound that’s helping shore up household balance sheets may support consumer spending that accounts for about 70 percent of the economy.
“So far the consumer has been fairly resilient, but I think the impact of higher taxes is still to come,” Ryan Sweet, a senior economist at Moody’s Analytics Inc in West Chester, Pennsylvania, said before the report.
“Some of the brinkmanship in Washington over the last few months may dampen consumers’ expectations.”
Economists at Moody’s Analytics are the most accurate consumer-confidence forecasters in the last two years, according to data compiled by Bloomberg.
Forecasts of 79 economists surveyed by Bloomberg ranged from 60 to 72. The measure averaged 53,7 in the recession that ended in June 2009.
Another report showed home prices in 20 US cities jumped in the 12 months to January by 8,1 percent, the biggest year-to-year gain since June 2006 and a sign the housing-market recovery is strengthening.
The S&P/Case-Shiller index of property values climbed 1 percent from December.
The Conference Board’s gauge of consumer present conditions dropped to 57,9 in March from 61,4 in February.
The measure of expectations for the next six months decreased to 60,9 from 72,4.
Those expecting business conditions to improve in the next six months declined to 14,4 percent in March, the smallest share since November 2011, from 18 percent the prior month.
“The recent sequester has created uncertainty regarding the economic outlook and as a result, consumers are less confident,” said Lynn Franco, director of economic indicators at the Conference Board, said in a statement.
The share of consumers expecting more jobs to become available in the next six months slumped to 12,3 percent in March, the worst reading since October 2011, from 16,1 percent in February.
The share of respondents who expect an increase in their income in the next six months fell to 13,7 percent from 15,8 percent the prior month.
The number of respondents who said jobs are currently plentiful fell to 9,4 percent in March from 10,1 percent.
Other measures of consumer confidence have been mixed. The Bloomberg Consumer Comfort monthly gauge of expectations improved to minus 4 in March from minus 7 in February, according to results of the Bloomberg Consumer Comfort Index.
The weekly measure fell for the first time in seven weeks, to minus 33,9 from minus 31,6.
The Thomson Reuters/University of Michigan preliminary index of consumer sentiment decreased in March to 71,8 from 77,6 the prior month, as Americans’ expectations deteriorated.
Darden Restaurants Inc, whose brands include the Olive Garden and Red Lobster, is among companies seeing signs of a pickup in household spending after 2 percentage-point increase in the tax that funds Social Security. The levy means Americans earning US$50 000 a year are taking home about US$80 less a month.
“The consumers just weren’t prepared, despite all the conversation, for the payroll tax increase, and there was a pretty rapid spike up in gasoline prices,” Clarence Otis, chairman and chief executive officer of Darden, said on a March 22 earnings call. “But March indicates that consumers have adjusted.”
A pick-up in the labour market may help sustain sentiment and spending.
Employers hired a net 236 000 workers last month following gains of 119 000 in January, Labour Department figures show.
That helped to push the unemployment rate down to 7,7 percent, its lowest level since December 2008.
Fuel prices are also stabilising after rising since mid-December. The price of a gallon of regular unleaded petrol was US$3,67 on March 24, down from US$3,79 at the end of February, according to AAA, the largest US motoring group. — Bloomberg.
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