(Bloomberg) — Consumer confidence declined in March to a four-month low as optimism about the U.S. economy was tempered by weaker income expectations and a rebound in gasoline prices.
The University of Michigan said Friday its preliminary consumer sentiment index decreased to 91.2 this month from 95.4 in February. The median projection in a Bloomberg survey of economists called for a reading of 95.5.
Consumers were less upbeat this month as cold weather boosted utility bills, the cost of gas advanced from the almost six-year low in January and wage growth was limited among middle- and lower-income households. At the same time, a better job market is among reasons Americans may feel comfortable spending.
The gain in gasoline prices is “enough, probably, to take a little bit of the wind out of the sails of the consumer,” Michael Hanson, U.S. senior economist at Bank of America in New York, said before the report. “Confidence is likely to continue to be on a gradual upward trend as the backdrop for the consumer continues to look better.”
Estimates of the 68 economists in the Bloomberg survey for the sentiment measure ranged from 92 to 98. The gauge averaged 75.8 through February from the start of this expansion in June 2009. It averaged 88.8 in the five years leading to the last recession that started in December 2007.
The Michigan sentiment survey’s index of expectations six months from now decreased to 83.7, the lowest since November, from 88 last month. The gauge of current conditions, which measures Americans’ views of their personal finances, fell to 103 in March, also a four-month low, from 106.9 a month earlier.
“Positive personal financial gains lessened in early March among lower- and middle-income households due to fewer reports of income gains and more frequent reports of drains on their budgets due to higher utility costs,” Richard Curtin, director of the Michigan Survey of Consumers, said in a statement. At the same time, “the data provide no indication that consumers think that robust job growth has ended.”
The cost of a gallon of regular gasoline was $2.44 as of March 12, up from $2.03 on Jan. 25 that was the lowest since March 2009, according to motoring group AAA. Prices had been declining steadily since $3.67 a gallon at the end of June.
Americans expected an inflation rate of 3 percent in the next year, the highest since September, after 2.8 percent in February. Over the next five to 10 years, they expect a 2.8 percent rate of inflation, compared with 2.7 percent in February.