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The numbers: A survey of consumer confidence rose to 107.2 in March and increased for the first time in 2022, but Americans are still uneasy about high inflation and the economic fallout from the war in Ukraine.
Economists polled by The Wall Street Journal had forecast the index to total in 107.5 in March.
The first increase in three months was the result of the February reading being revised down to 105.7 from an original 110.5.
Confidence deteriorated last fall after the delta and omicron viral outbreaks. Now rising inflation and the war in Ukraine are adding to angst.
Consumers predict inflation will increase 7.9% in the next 12 months, the highest level ever recorded in the survey, The Conference Board said Tuesday.
What’s kept confidence from plunging even further to new pandemic lows is a strong labor market. Workers have leverage over companies for the first time in decades, resulting in more people switching jobs and earning higher pay.
Big picture: The U.S. economy is still expanding at a steady pace, but the headwinds are growing.
For one thing, the Federal Reserve is raising interest rates for the first time in four years to combat high inflation.
Fresh Covid lockdowns in China and the Russian attack on Ukraine, meanwhile, threaten to further disrupt global supply chains and and worsen shortages in the U.S. that have sparked the surge in inflation.
The strong labor market is the economy’s protective shield. As long as Americans feel secure in their jobs the U.S. is likely to remain on the path to recovery.
Key details: An measure of how consumers feel about the economy right now rose by 10 points to 153.0, marking the highest point since last July.
Yet a similar gauge that looks ahead six months dipped to 76.6 from 80.8, suggesting Americans are still uncertain about the path of the economy.
Worries about high inflation and rising interest rates are largely behind the unease. Fewer Americans expect to buy big-ticket items such as new cars in the months ahead.
The results of the consumer confidence poll are comparatively more optimistic, however, than a similar survey of consumer sentiment that touched an 11-year low in March.
The confidence surveys puts more emphasis on what Americans think of the labor market, while the sentiment gauge largely measures what people think about their own financial well-being.
Historically the strength of the labor market offers better cues on the path for the economy.
Market reaction: In early trades, the Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
rose sharply in Tuesday trades on hopes of a resolution to the Russia-Ukraine conflict.
