Market & Industry

Consumer Confidence Inches Up in March Amidst Inflation Concerns

Graph showing consumer confidence index increasing, with a note about cost of living concerns. - nationaljeweler.com

Confidence Rises, Present Situation Improves

Consumer confidence in the U.S. showed a modest increase for the second consecutive month in March, according to The Conference Board. The Consumer Confidence Index rose to 91.8 in March, up from a downwardly revised 91.0 in February. This uptick was driven by an improved assessment of current business and labor market conditions, which offset a slight decline in consumers' short-term expectations.

The Present Situation Index, which gauges consumers' views on current economic conditions, saw a significant increase of 4.6 points, reaching 123.3. This indicates that consumers feel more positive about the present state of the economy and the job market. In March, 21.9% of consumers reported business conditions as ‘good’, an increase from 20.4% in February, while those reporting ‘bad’ conditions decreased to 16.3% from 19.0%.

Expectations Dim Slightly Amidst Future Worries

Despite the positive movement in the present situation, the Expectations Index, which measures consumers’ outlook for the next six months, dipped by 1.7 points to 70.9. This suggests that while consumers feel better about today, they harbor more pessimism about the near future regarding income, business conditions, and employment. Specifically, the share of consumers anticipating fewer jobs in six months rose to 27.9% from 26.2% in February.

Inflation and Geopolitical Tensions Impact Sentiment

A significant factor influencing consumer sentiment in March was the surge in inflation expectations. Both average and median 12-month inflation expectations rose notably, reaching levels not seen since August 2025. This increase is attributed to rising costs from tariff pass-throughs and a spike in oil prices following the commencement of the war in Iran in late February. Dana M. Peterson, Chief Economist at The Conference Board, noted that ‘comments about prices and the cost of goods suggest that the cost of living remained at the top of consumers’ minds.’ The conflict in Iran also led to a notable increase in comments related to oil/gas and war/conflict in the survey responses.

Demographic and Income Group Variations

Consumer confidence varied across different demographic and income groups. Respondents under 35 years old remained the most optimistic, while those aged 55 and over were the least optimistic. On a six-month moving average basis, confidence continued to decline for six of the eight income groups. The exceptions were consumers earning between $25,000 and $34,999, and those earning $125,000 and over, who showed slightly improved optimism. Politically, Republicans maintained the highest level of optimism, followed by Independents, with Democrats expressing the lowest confidence.

Purchasing Plans Shift Towards Necessities

Consumers’ plans for major purchases in the next six months indicated a shift away from discretionary spending. More consumers indicated ‘no’ when asked about buying big-ticket items. Among those planning purchases, used cars, furniture, TVs, and smartphones were the most popular choices. However, spending plans for services over the next six months also saw a decline, moving from ‘yes’ and ‘maybe’ to ‘no’. Utilities and healthcare emerged as top spending categories, displacing personal travel and hotels, reflecting concerns about rising costs in these essential areas.