Drop in US consumer confidence points to 'severe' contraction, Conference Board says

A popular gauge of consumer confidence in the US revealed what the survey compiler termed a "worrisome" worsening in Americans' short-term outlook which pointed to a "severe contraction".

The Conference Board's consumer confidence fell from a reading of 132.6 for February to 120.0 in March.

That was better than the fall to 114.0 that economists had anticipated, as consumers' view on the present situation help up better than had been expected.

Lynn Franco, a senior director at the think-tank, said that "relatively strong" outcome was a reflection of the economy's "strong footing" before the Covid-19 pandemic hit and did not yet reflect the surge in initial weekly jobless claims.

However, Franco went on to add that: "the intensification of COVID-19 and extreme volatility in the financial markets have increased uncertainty about the outlook for the economy and jobs.

"March's decline in confidence is more in line with a severe contraction – rather than a temporary shock – and further declines are sure to follow."

The sub-index for current conditions slipped from 169.3 to 167.7, but a separate sub-index linked to the short-term outlook for income, business and labour market conditions fell from 108.1 to 88.2.

To take note of, the proportion of respondents who were now anticipating business conditions to worsen jumped from 7.2% to 14.9%, while those expecting fewer jobs in the next few months rose from 12.0% to 17.1%.