Nosedive in March Consumer Sentiment

The lackluster results are likely due to consumers’ wariness of the effects of the failure of federal government to forestall the onset of the automatic federal budget cuts of $85 billion (the sequester) that took effect at the beginning of the month. The results of the survey showed that 34% of respondents viewed government economic policies as unfavorable, a new record that surpasses last month’s old record of 31%.

That does not mean that consumers have stopped buying. Sales of durable goods fell only slightly.

But the survey looks at sentiment, not solely at data. And consumers are justly concerned about the federal government’s inability to agree on just about anything. Higher prices for gasoline also play a large role in consumers’ view of the economy, and the slow dip in fuel prices since the first of March hasn’t been enough to offset continuing worries.