Consumer Confidence Index drops sharply
NEW YORK -- U.S. shoppers' worries about juggling rising gas and food prices and other household costs flared up in March, pushing a closely watched barometer of sentiment sharply down.
The sharp decline, which followed a three-year high in February and reversed five straight months of improvement, raises questions about shoppers' ability and willingness to spend in coming months.
The Conference Board's Consumer Confidence Index fell more than expected to 63.4 from a revised 72.0 in February. Economists expected a decline to 65.4, according to FactSet.
The drop of nearly nine points was the steepest since the 10.1-point plunge from January 2010 to February 2010. That decline was in part triggered by worries about Greece's national debt, which hammered the U.S. stock market.
The index measures how Americans feel about business conditions, the job market and the next six months. It has hovered in a tight range from the high 50s to low 60s over the past year.
A reading of 90 indicates a healthy economy. The index hasn't approached that level since the recession began in December 2007.
Shoppers' outlook over the next six months worsened. The part of the index measuring those expectations fell to 81.1 from 97.5 last month. The other gauge, which measures how consumers feel now about the economy, improved to 36.9 from 33.8 in February.
Economists monitor confidence because consumer spending, including big-ticket items such as housing and health care, accounts for about 70 percent of U.S. economic activity and is critical for a strong rebound.
"Consumers' inflation expectations rose significantly in March and their income expectations soured, a combination that will likely impact spending decisions," Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement.
Japan's earthquake, tsunami and the nuclear crisis likely rattled U.S. confidence too, Franco said, but those kinds of shocks don't typically last long.
The earthquake hit Japan on March 11, five days before the end date for the Conference Board's survey.