Foodservice Equipment Reports

Consumer Confidence Indices Down Sharply, Gas Prices Up (And Up)

Oh, those pesky gasoline- and food-price increases! Worried about how inflation of these critical commodities will affect their household income, and also less optimistic about continuing employment growth this year, American consumers sent the two major measures of confidence reeling in March.

The Consumer Sentiment Index from Thomson Reuters/The University of Michigan Surveys of Consumers plunged nearly 13% from February’s reading to 67.5. The Conference Board’s Consumer Confidence Index fell to 63.4 from 72 in February. The expectations indexes from both organizations fell by even greater percentages.

The “cause of the sharp drop in confidence was the rise in gas and food prices,” said Richard Curtin, chief economist of the Surveys of Consumers. “The more damaging cause, however, was that the fewest consumers in more than half a century expected income increases,” he added.

Lynn Franco, who runs The Conference Board’s consumer research, voiced similar rationales for the sharp fall in confidence. The decline “was prompted by a sharp decline in expectations. Consumers’ inflation expectations rose significantly in March and their income expectations soured,” she said.

Both organizations expressed worries that if the commodity inflation continues and the jobs outlook deteriorates, consumers will once again retrench. But interestingly, that doesn’t seem to be happening yet, partially because consumers have not yet felt the sting. Both groups’ current situation readings actually rose. “There was no decline in buying plans despite all the widespread economic gloom,” the Surveys of Consumers release read.

Meanwhile, prices for both gasoline and many foodstuffs continue to rise. The U.S. Energy Information Administration reported another 8.8-cent rise in average U.S. gasoline prices for the week ended April 4. Prices now exceed $4 a gallon in many urban areas and California and Hawaii. We’ll get a read on both wholesale and consumer food prices this week, when the Bureau of Labor Statistics releases the Producer Price and Consumer Price Index data for March.

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