The Conference Board Consumer Confidence Index fell sharply in March, dropping 7.2 points to 92.9—its lowest level in months. This decline was primarily driven by weakening expectations for future economic conditions. The Expectations Index, which reflects consumers’ short-term outlook for income, business, and employment, plunged 9.6 points to 65.2, marking its lowest level in 12 years.
Historically, readings below 80 have signalled an impending recession. Meanwhile, the Present Situation Index, which gauges perceptions of current economic conditions, fell 3.6 points to 134.5.
The biggest change with older consumers
Older consumers, particularly those over 55, saw the steepest decline in confidence, while sentiment among younger consumers under 35 improved slightly due to a more favourable view of current conditions. Confidence also fell across most income levels, except for households earning more than $125,000 annually.
“Consumer confidence declined for a fourth consecutive month in March, falling below the relatively narrow range that had prevailed since 2022,” said Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board. “Of the Index’s five components, only consumers’ assessment of present labour market conditions improved, albeit slightly. Views of current business conditions weakened to close to neutral.”
Market volatility
Market volatility likely contributed to the decline, with consumers turning negative on the stock market for the first time since late 2023. Only 37.4% of respondents expected stock prices to rise over the next year, a sharp drop from February’s 47%. Meanwhile, 44.5% anticipated a market decline, up 11 percentage points from the previous month. Inflation expectations also worsened, rising from 5.8% in February to 6.2% in March, as consumers remained concerned about the cost of essentials like eggs and the impact of tariffs.
While consumers’ current financial assessments improved slightly, their outlook for future finances hit its lowest level since mid-2022. The share of consumers expecting a recession over the next year remained at a nine-month high. In addition, more consumers (54.6%) anticipated rising interest rates in the coming months, while fewer (22.4%) expected rates to decline.
Can consumers predict their financial future?
A special survey revealed that while over 45% of consumers felt confident about predicting their financial future, many struggled to assess broader economic trends. Over one-third found it difficult to predict employment and business conditions, and nearly 39% were uncertain about inflation trends.
Despite mounting concerns, some consumer spending plans remained resilient. Home and car purchase intentions declined on an average six-month basis, but interest in big-ticket items like appliances and electronics rose, possibly due to fears of price hikes from new tariffs.
Spending priorities also shifted, with fewer consumers planning to spend on entertainment and sports but more intending to invest in outdoor activities and travel. Vacation plans also increased.