The big jump in gasoline prices brought on by the escalating violence in the Middle East took a big toll on consumer attitudes during the early part of March according to the latest survey on consumer confidence.
The Reuter's/University of Michigan's Consumer Sentiment Index fell from 77.5 in February to 68.2 in March, according to preliminary data.
The survey's peek at current economic conditions came in at 83.6, down from 86.9 the month before. The survey's gauge of consumer expectations tumbled to 58.3 from 71.6, the lowest level since March 2009, Reuters said.
The upward spike in gasoline prices not only dampened sentiment more than expected, it also boosted inflation expectations.
The one-year outlook increased by 1.2 percentage points to 4.6%, while longer-term inflation expectations, which have generally been stable, increased 0.3% to 3.2%.
Still, longer-term bond prices have been fairly stable amid the spike in gasoline, suggesting that consumers may be overreacting to what’s happening to oil prices.
I’m already hearing chatter among some analysts that falling consumer sentiment will hurt consumer spending, but I remain unconvinced that the rise in gasoline prices will derail the recovery, especially given that natural gas and other forms of energy have been largely unaffected by what’s going on overseas.
Unless gasoline prices continue to surge, the impact on consumer spending will likely have only a limited impact at the nation’s retailers.
2 comments:
And Libya crisis will rocket the prices soon too
All the uncertainty over Libya and tensions in the Middle East are clearly underpinning prices. Thanks for your comment.
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