US Conference Board Consumer Confidence index rose from 105.7 to 107.2 in February, below expectation of 107.9. Present Situation Index rose from 143.0 to 153.0. Expectations Index, however, dropped from 80.8 to 76.6.
“Consumer confidence was up slightly in March after declines in February and January,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The Present Situation Index rose substantially, suggesting economic growth continued into late Q1. Expectations, on the other hand, weakened further with consumers citing rising prices, especially at the gas pump, and the war in Ukraine as factors. Meanwhile, purchasing intentions for big-ticket items like automobiles have softened somewhat over the past few months as expectations for interest rates have risen.”
“Nevertheless, consumer confidence continues to be supported by strong employment growth and thus has been holding up remarkably well despite geopolitical uncertainties and expectations for inflation over the next 12 months reaching 7.9 percent—an all-time high. However, these headwinds are expected to persist in the short term and may potentially dampen confidence as well as cool spending further in the months ahead.”
Full release here.
ECB Lagarde emphasizes principles of optionality, gradualism and flexibility
ECB President Christine Lagarde said in a speech the economic impact of Ukraine war is a “supply shock” that ” simultaneously pushes up inflation and reduces growth.” Three main favors are likely to take inflation higher, including energy, food, and manufacturing bottlenecks.
The war also posses “significant risks” to growth, implying a loss of EUR 150B in the economy in one year. The conflict also “drain confidence” through at least two channels. Firstly, households become more pessimistic and cut back on spending. Secondly, business investment is likely to be affected.
As for ECB, Lagarde said the best way to navigate this uncertainty is to emphasize the “principles of optionality, gradualism and flexibility.” Optionality means if incoming data support that medium term inflation will not weaken after the end of net asset purchases, the APP will be concluded in Q3. But ECB also stand ready to revise the schedule for net asset purchases in terms of size and/or duration. Gradualism means the adjustments to interest rate will take place “some time” after end of net purchases and will be gradual. Flexibility means ECB will use the its toolkit to ensure policy is transmitted evenly across all parts of Eurozone.
Full speech here.