On Tuesday, the Consumer Confidence Index was reported for March. This monthly gauge of consumer sentiment is released by The Conference Board, a U.S.-based global provider of economic data and analytics. For the uninitiated, the index has a benchmark of 100. Any level above 100 indicates an optimism by consumers on their future outlook for the economy, jobs and income.
March’s report of 109.7 represented a new post-pandemic high. It greatly exceeded Wall Street’s forecast of just 96 and was a sizable jump from February’s report of 90.4. Since the initial fallout from the COVID-19 virus 12 months ago, Americans’ confidence has struggled to regain its footing. In April 2020, the index plummeted to 85.7, a six-year low, snapping a string of 44 consecutive months of 100-plus levels. For perspective, the all-time high for the Consumer Confidence Index is 144.7 set in May 2000.
March’s surge in consumer confidence was driven by the continued rollout of the COVID-19 vaccines and their role in reopening the economy. For Wall Street, the index’s relevance is that it tends to serve as a predictor of consumer spending — the key driver of America’s economy. Historically, optimistic consumers tend to spend more. Any increase in consumer demand for goods and services must be accompanied by an increase in production and labor force to meet that demand. For employees, this translates to rising wages and greater disposable income. For companies, economic growth means greater profits.
