NEW YORK (Reuters) - Consumer confidence dipped in early March to fresh multiyear lows, with many consumers viewing the economy as being in recession, a private survey showed on Friday.
Adding to the downbeat outlook was a jump in worries over inflation due to surging fuel prices. Long-term inflation expectations however cooled a bit, according to the Reuters/University of Michigan Surveys of Consumers.
The surveys’ index of confidence slipped to 70.5 in early March from the final February reading of 70.8. Economists polled by Reuters had predicted a lower figure of 69.0.
“There was nearly unanimous agreement among consumers that the economy was now in recession,” said Richard Curtin, director of the survey, in a statement.
The recent deterioration in consumer sentiments coincided with data earlier this week showing a surprise pullback in retail sales in February.
“Financial distress caused by high fuel and food prices as well as prospects for higher inflation and joblessness during the year ahead have caused consumers to become much more cautious spenders,” Curtin said.
This grim consumer picture will likely intensify problems for manufacturers and rest of Corporate America, which has already been roiled by the housing slump and global credit crunch.
One-in-five households in the latest survey said they have delayed buying vehicles and big-ticket items, blaming income uncertainty. Overall, buying attitudes toward vehicles and durable goods match the same low levels as during the 1990 recession.
Consumers’ view of inflation one year ahead, at 4.5 percent, was up sharply from February’s 3.6 percent. Other than for the month after Hurricane Katrina in the fall of 2005, the latest 1-year inflation reading was the highest since the 1990 recession, according to Curtin.
Long-term inflation expectations, a proxy for core inflation, edged down to 2.9 percent in early March from 3.0 percent at the end of February.
“While inflation expectations are well anchored at the moment, it is not clear how much longer consumers’ core inflation expectations will remain so docile,” Curtin said.
Reporting by Richard Leong; Editing by Chizu Nomiyama