Consumer confidence improved this month, The Conference Board found, but there are long-term concerns about the trajectory of the U.S. economy. File photo by John Angelillo/UPI | License Photo
March 28 (UPI) -- The U.S. consumer remains somewhat defiant against lingering inflationary pressures, but job prospects may be starting to fade, The Conference Board said Tuesday.
The board's Consumer Confidence Index improved from 103.4 in February to 104.2 in March. The situation was largely mixed, however, as the outlook for current conditions declined, though prospects for the future for income, business and labor markets increased.
"Driven by an uptick in expectations, consumer confidence improved somewhat in March, but remains below the average level seen in 2022," Ataman Ozyildirium, the senior director for economics at The Conference Board, said.
Inflation remains elevated at around 6% year-on-year, about three times as high as the target rate for policymakers at the U.S. Federal Reserve. Hiring, however, remains resilient. The Labor Department reported that initial claims for unemployment insurance during the week ending March 18 declined by 1,000 from the previous week to reach 191,000 claims. The less-volatile, four-week moving average showed a decrease of 250 from last week's unrevised level of 196,500.
A strong labor market compounds the challenge for the U.S. Federal Reserve, which is trying to arrest consumer-level inflation without steering the economy toward a broader recession that would be marked by widespread layoffs.
"While consumers feel a bit more confident about what's ahead, they are slightly less optimistic about the current landscape," Ozyildirium said. "The share of consumers saying jobs are 'plentiful' fell, while the share of those saying jobs are 'not so plentiful' rose."
Consumer expectations on inflation remain elevated, though The Conference Board observed a mixed outlook there as well, with planned purchases for big-ticket items like appliances on the decline, while plans for an automobile purchase are on the rise.
Despite the mixed sentiment from U.S. consumers, James Knightly, the chief international economist for investment bank ING, said the overall outlook is somewhat grim.
"Longer term, the lagged response to higher borrowing costs together with the likelihood that credit availability will become more restricted due to the fallout from recent bank turmoil means we retain a cautious bias on the prospects for consumer spending in the second half of 2023," he said.
Survey results for The Conference Board were compiled before the collapse of Silicon Valley Bank ushered in concerns about the prospects of turmoil in the global financial sector.