The University of Michigan/Reuters consumer sentiment index fell in March for the first time since August. The index reading of 74.3 is a full point below the February reading of 75.3.
Recent improvement in the US jobs market, signs of life in residential construction, brisk auto sales, and low inflation were seemingly outweighed by rising gasoline prices. Energy and costs are not included in core inflation numbers — reported today at 0.1% — but today’s report on headline inflation showed an increase of 0.4% in February. Gasoline prices rose 6% in February, but the overall cost of energy rose only 3.6% due to low natural gas prices.
The other factor in the lower sentiment reading is likely related to a drop in inflation-adjusted earnings. People simply feel poorer when they have to spend so much money to fuel up their cars. The surge in gasoline prices forces families to budget differently and could easily have wiped out some if not all of planned discretionary (or even non-discretionary) spending.
Not having control of your money and your life does not lead to good thoughts about the nation’s economy.
Paul Ausick
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