Confidence among U.S. consumers fell more than forecast in March as Washington’s budget battle soured Americans’ views of the economic outlook.
The Conference Board’s index declined to 59.7 from a revised three-month high of 68 in February, data from the New York-based private research group showed today. Economists surveyed by Bloomberg projected the March measure would fall to 67.5.
“This is really quite a big hit,” said Ian Shepherdson, chief economist at Pantheon Macroeconomic Advisors Inc. in White Plains, New York, who projected a reading of 63. “The longer confidence stays down and the further it falls, the more chance that it will be reflected in weaker spending.”
Concern mounted that sweeping cuts in planned government spending may hinder the expansion and limit recent progress in the labor market. At the same time, a rally in stocks and a housing rebound that’s helping shore up household balance sheets may help keep consumer purchases, which account for about 70 percent of the economy, from slumping.
Stocks held gains after the report, with the Standard & Poor’s 500 index climbing 0.6 percent to 1,560.51 at 10:34 a.m. in New York.
Forecasts of 79 economists surveyed by Bloomberg ranged from 60 to 72. The measure averaged 53.7 in the recession that ended in June 2009.
Another report today showed home prices in 20 U.S. cities jumped in the 12 months to January by 8.1 percent, the biggest year-to-year gain since June 2006 and a sign the housing-market recovery is strengthening. The S&P/Case-Shiller index of property values climbed 1 percent from December.
The Commerce Department said sales of new homes in February capped the best back-to-back months in more than four years. Purchases of newly built homes fell 4.6 percent to a 411,000 annualized pace, following a 431,000 rate in the prior month.
The Conference Board’s gauge of consumer present conditions dropped to 57.9 in March from 61.4 in February. The measure of expectations for the next six months decreased to 60.9 from 72.4.
Those expecting business conditions to improve in the next six months declined to 14.4 percent in March, the smallest share since November 2011, from 18 percent the prior month.
“The recent sequester has created uncertainty regarding the economic outlook and as a result, consumers are less confident,” said Lynn Franco, director of economic indicators at the Conference Board, said in a statement.