Even with worries about the current economic situation weighing
on American consumers’ minds, confidence in the economy edged
up this month.
The latest Index of Consumer Sentiment, released Friday,
reported that consumers’ confidence in the economy rose to
95.8 in March from 94.4 in February. That level is significantly
higher than the 77.6 recorded in March 2003.
While the Index — which is released by the
University’s Surveys of Consumers on the last Friday of every
month — recorded an increase during March, the Index is still
lower than January’s 103.8 recording. January was the first
time since November 2003 that the Index rose above 100.
In a written statement, Surveys of Consumers Director Richard
Curtin said the increase in consumer confidence from last month
could be attributed to expectations of improved personal finances
due to higher income and lower mortgage rates.
A Surveys of Consumers news release stated that nine out of 10
consumers anticipated an improvement in their financial situation
for the rest of the year. Consumers felt this way even though there
is “a widespread expectation of a higher inflation
rate,” according to the release.
But with economic issues such as slow job growth and the
outsourcing of white-collar jobs overseas at the forefront of the
2004 presidential race, consumers are nervous that uncertainties
may arise from economic policies adopted by the current
administration. Curtin said the March survey recorded “the
lowest level of confidence in government economic policies since
President Bush was first elected.
“The gain in confidence was recorded despite persistent
concerns about slower job growth and higher gas prices,”
Curtin said. “Consumers were concerned that the slower pace
of economic growth, higher productivity and global outsourcing
would keep employment growth at lower than normal levels during the
year ahead.”
Though consumers have concerns, financial outlooks improved due
to increased saving and decreased spending, Business School Prof.
Nejat Seyhun said. He added that consumer confidence is mostly
driven by the employment situation.
“If the jobs picture improves, the number goes up,”
Seyhun said. “We got some good news recently. Overall,
incomes rose last month and the savings rate is higher. The
increase in savings suggests that people are not fully optimistic.
They are saving and not spending. Spending went down.”
But Seyhun added that the economy is “not out of the woods
yet.”
The Expectations Index, a component of the federal Index of
Leading Economic Indicators, rose from 88.5 in February to 88.8
last month.