The Conference Board reports that consumer confidence surged from a February index of 95.0 to 110.2 for March. The Present Situation index rose from 96.4 in February to 111.5 in March, while the Expectations index jumped from 94.0 to 109.3. The Consumer Confidence Survey is based on a sample of 5,000 U.S. households.
But as promising as The Conference Board’s numbers appear, Carl Steidtmann, chief economist for New York-based Deloitte Research, says that businesses shouldn’t get complacent. “At best, confidence is a measure of how consumers view their current economic situation,” Steidtmann said in a March 25 statement. “It says very little about how they will act in the future. Economists would be wiser to track the fundamentals upon which consumer spending rests—namely income, mortgage refinancing, energy prices, and taxes.”
Steidtmann tracked The Conference Board and the University of Michigan Consumer Confidence indices against real consumer spending before, during, and after recessions of the past 20 years. He believes that consumer sentiment numbers are politically driven, pointing to events like the Iran Contra Scandal, the end of the Gulf War, and the 1992 election, which pulled down confidence even as spending rose.