Consumer Confidence up Slightly as Recession Looms

American consumers are gloomy about current economic conditions but confident in the future.

That’s according to new findings from The Conference Board, which said Tuesday (March 28) that its Consumer Confidence Index had risen slightly in March, from 103.4 to 104.2.

Meanwhile, the board’s Expectations Index — based on consumers’ short-term outlook for income, business, and labor market conditions — rose from 70.4 in February to 73, with an important caveat.

“For 12 of the last 13 months — since February 2022 — the Expectations Index has been below 80, the level which often signals a recession within the next year,” the board said.

The Conference Board notes that the survey’s cutoff date fell about 10 days after the back-to-back failures of Silicon Valley Bank and Signature Bank.

The survey also included a special question this month about consumers’ planned spending habits in the coming months.

“The results reveal that consumers plan to spend less on highly discretionary categories such as playing the lottery, visiting amusement parks, going to the movies, personal lodging, and dining,” the release said.

However, consumers plan to spend more on essential categories like healthcare and auto repair, or on economic entertainment options like streaming services.

Recent reporting by PYMNTS has shown retailers saying they’re seeing slower sales as consumers skip non-essential purchases, leading stores to forecast a “very, very soft” 2023.

It’s a trend PYMNTS research began noting in December of last year, as consumer

spending on non-necessities such as furnishings or toys began a dramatic decline. Even as inflation has dropped, the cost of core goods remains high.

While shoppers are trading down and cutting back, they’re still spending more than a fifth of their income on the basics: food, shelter clothing. Add in other essentials like transportation, and many consumers simply don’t have room for extras.

And as we noted earlier this week, PYMNTS’ latest report on paycheck-to-paycheck consumers, done in collaboration with LendingClub shows that consumers are supplementing household cash through side jobs.

Nearly half the employed consumers we surveyed have a secondary source of income. This extra income runs into the billions of dollars.

“If paycheck-to-paycheck consumers are bringing in billions of dollars from these side gigs, and a significant percentage of these households are depended on these active forms of income to help offset the monthly struggle of making ends meet, any turbulence in the gig economy will have negative ripple effects,” PYMNTS wrote.