A closely watched barometer of consumer confidence surged in March to its highest mark in more than six years. The report by the Conference Board fueled indications that some weak economic data in recent months were caused by unusually bad weather and were not a harbinger of a more protracted slowdown.
"Consumer confidence improved in March, as expectations for the short-term outlook bounced back from February's decline," said Lynn Franco, director of economic indicators at The Conference Board, a New York-based business and economics group. "While consumers were moderately more upbeat about future job prospects and the overall economy, they were less optimistic about income growth. Overall, consumers expect the economy to continue improving and believe it may even pick up a little steam in the months ahead."
The Conference Board's index is based on a monthly survey by Nielsen, a global provider of information and analytics around what consumers buy and watch. Because nearly 70% of the economy depends on consumer spending, the Conference Board's monthly survey is considered a key indicator of future economic activity. When people are feeling confident, they spend more in restaurants, supermarkets and shopping malls and are more willing to write large checks for new cars and homes.
Americans' outlook for the job market was moderately more optimistic, the Conference Board said. And, indeed, over the last few weeks, government and private reports have shown economic activity accelerating. Retail sales and factory growth were up in February, and the labor market also rebounded after lackluster job creation in December and January.
The improving economic picture led Federal Reserve policymakers last week to continue reducing a key stimulus program and signal that short-term interest rates could start rising next year from the near-zero level they've been set at since late 2008.
New-home sales dropped 3.3% in February from the previous month, the Commerce Department said. The Case-Shiller index, which tracks housing prices in 20 major cities, was down slightly in January for the third straight month.
More optimism among consumers could help reverse those trends. And the end of a long winter appears to be boosting their mood.
The index, which began in 1967, rose to 82.3 in March from 78.3 in February. It has ranged from a high of 144.7 in 2000 to an all-time low of 25.3 in early 2009. In March 2013 it was 61.9.
"There had been sort of this upward trend in consumer confidence leading into the fall, then we had the government shutdown, which sent a bit of a shock wave to consumers and since then we've been sort of fighting our way back," Franco said.
When the index is 90 or better, it generally indicates a confident consumer. So there still is a ways to go, Franco said.
"It's been a very long haul, but it was a very severe recession," she said. "I think there's more positive momentum and we'd expect to see continued improvement in confidence unless there's some kind of shock" in the economy.