Consumers ‘gloomy’ about future as expectations index its 12-year low

NEW YORK – The state of the economy, business conditions and labor conditions, are continuing to take a toll on consumers. According to the latest report from the Conference Board, consumer confidence dropped yet again for March, marking four months of decline. But it is the outlook on the future that’s really raising red flags.

The Consumer Confidence Index for March dropped 7.2 points, bringing it down to 92.9. Consumers’ short-term outlook for income, business and labor market conditions – known as the Expectations Index – took a major dive too, tumbling 9.6 points. The Expectations Index now sits at 65.2, which is well below the 80-point threshold that typically signals a recession on the horizon. It is also the lowest level it has been in 12 years.

The Present Situation Index, based on consumers’ assessment of current conditions, dipped 3.6 points as well and now sits at 134.5.

“Consumer confidence declined for a fourth consecutive month in March, falling below the relatively narrow range that had prevailed since 2022,” said Stephanie Guichard, senior economist, global indicators at the Conference Board. “Of the Index’s five components, only consumers’ assessment of present labor market conditions improved, albeit slightly. Views of current business conditions weakened to close to neutral. Consumers’ expectations were especially gloomy, with pessimism about future business conditions deepening and confidence about future employment prospects falling to a 12-year low.

“Meanwhile, consumers’ optimism about future income, which had held up quite strongly in the past few months, largely vanished, suggesting worries about the economy and labor market have started to spread into consumers’ assessments of their personal situations.”

According to the report, the decline in confidence for March was driven mostly by consumers over the age of 55. It was also broad-based across income groups, with the exception of households earning more than $125,000 a year. Guichard also noted that consumers turned negative towards the stock market for the first time since 2023.

“In March, only 37.4 percent expected stock prices to rise over the year ahead — down nearly 10 percentage points from February and 20 percentage points from the high reached in November 2024,” she said. “Meanwhile, average 12-month inflation expectations rose again — from 5.8 percent in February to 6.2 percent in March — as consumers remained concerned about high prices for key household staples like eggs and the impact of tariffs.”

Here are a few other takeaways from this month’s Consumer Confidence report:

Present Situation

Consumers’ assessments of current business conditions were significantly less positive in March.

• 17.7 percent of consumers said business conditions were “good,” down from 19.1 percent in February.
• 16.6 percent said business conditions were “bad,” up from 14.8 percent.

Consumers’ views of the labor market improved slightly in March.

• 33.6 percent of consumers said jobs were “plentiful,” unchanged from February.
• 15.7 percent of consumers said jobs were “hard to get,” down from 16.0 percent.

Expectations Six Months Hence

Consumers’ outlook for business conditions worsened in March.

• 17.1 percent of consumers expected business conditions to improve, down from 20.8 percent in February.
• 27.3 percent expected business conditions to worsen, up from 25.5 percent.

Consumers’ outlook for the labor market outlook also deteriorated.

• 16.7 percent of consumers expected more jobs to be available, down from 18.8 percent in February.
• 28.5 percent anticipated fewer jobs, up from 26.6 percent in February

Consumers were more pessimistic about their income prospects in March.

• 16.3 percent of consumers expected their incomes to increase, down from 18.8 percent in February.
• 15.5 percent expected their income to decrease, up from 12.8 percent.