March 28, 2024

The .final estimate of consumer sentiment for March rose 2.5 points to 79.4 compared to the preliminary estimate which showed a decline of 0.5 point.

Surveys of Consumers Director Joanne Hsu said,  “.Critically, consumers exhibited confidence that inflation will continue to soften. Assessments and expectations of personal finances improved modestly from last month, as the perceived negative effects of high prices and expenses on living standards eased. Strong stock market performance this month supported sentiment gains only for those with the largest holdings, with little impact on the index. Overall, sentiment is essentially unchanged throughout the first quarter of 2024, remaining just shy of the midpoint between the pre-pandemic level of sentiment and the historic trough from June 2022. This stability reflects a perception among consumers that the economy has been holding steady in its current state. As the election season progresses and debates over economic policy become more salient for consumers, their outlook for the economy could become more volatile in the months ahead.”

Many consumers have been concerned by the fact that while their nominal earnings were rising, inflation was eroding their purchasing power and, as a result, wages in real terms declined for roughly two years..

Given that sentiment was extremely low for a long time, one might have expected to see consumers cut back sharply on their spending.  There is no evidence of that.  Consumer spending continues to grow steadily.

The inflation rate should continue to slide as the year progresses and should allow the Fed to ease sometime during the summer.  We expect the funds rate to fall to 4.75% by the end of the year and continue falling to 3.5% in 2025..

Both the University of Michigan’s consumer sentiment index and the Conference Board’s measure of consumer confidence both show a moderate rebound in the past couple of months.  The two series can diverge from one month to the next, but the trends are similar.

We expect GDP growth of  2.2% in the first quarter as the economy continues to crank out jobs and wages rise.

Consumers’ assessment of current conditions rose 3.1 points to 82.5.

Consumer expectations for six months from now rose 2.2 points to 77.4.

Stephen Slifer


Charleston, SC