March’s Consumer Confidence Research Notes

by Jim Baird on March 30, 2010

The consumer confidence index rose to 52.5, a result well above expectations.  Consumer confidence has shown a gradual recovery since the index reached a historical low of 25.3 in February of last year.  The Index remains well below the historical average of 95.5 in spite of this recovery.

Increasing confidence came in the face of no change in the unemployment rate, but increasing expectations that the transition from stabilization to actual job creation may be imminent. 

The recession hammered consumers hard on many fronts, and we still see it today with persistently high unemployment.  Nonetheless, personal income has picked up and job market conditions should improve as the recovery continues, providing support for gradually improving sentiment.   

Given the labor market focus of the Index, we anticipate further improvement in confidence in the months ahead if the market’s expectation that the economy is at the cusp of job creation is on target.

The March employment situation report that will be released this Friday will be critical given growing expectations for a meaningful increase in non-farm payrolls.  If we get a positive result, it should provide a continued boost to consumers.

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