US consumer confidence declines in March, but no 'economic panic'

The spreading coronavirus and big falls in stock market prices weighed on US consumer sentiment at the start of the month, the results of the most closely-watched survey showed.

However, there were no signs of "economic panic" as during the Great Recession, the survey's chief economist, Richard Curtin, said.

"Perhaps the most important factor limiting consumers' initial reactions is that the pandemic is widely regarded as a temporary event."

The University of Michigan's preliminary consumer sentiment index fell from 101.0 at the end of February to 95.9 in early March.

Economists had penciled-in a reading of 96.4.

Both current consumer sentiment and their expectations ebbed.

A sub-index tracking the former dipped from 114.8 to 112.5, while that for expectations fell from 92.1 to 85.3.

According to Curtin, the biggest point loss among the sentiment indices, was in that judging prospects for the economy over the year ahead, which fell by 29 basis points, accounting for 83% of the total point fall in early March.

Yet consumers' views on the economy five years ahead in fact improved.

"The best policy antidote would be immediate relief provided by multiple sources of cash transfers and debt forbearance," Curtin continued.

"To avoid a recession, speed is more essential than targeting. Moreover, maintaining confidence in the effectiveness of economic policies is essential, otherwise the intended behavioral reactions on spending may not be forthcoming."

Commenting on the latest survey readings, Ian Shepherdson at Pantheon Macroeconomics said: "Both will fall much further over the next couple of months as the hit from the coronavirus, both directly and indirectly, via the stock market, is absorbed.

"Confidence reading remain at historically high levels, but that can’t last [...] if past experience is any guide we should expect it to fall by a further 15-to-25 points over the next couple of months."