Not Exactly Springing Forward: March 27 – 31

Consumers slowed their spending as they sent mixed signals about their mood. Here are the five things we learned from U.S. economic data released during the week ending March 31.


Consumer spending slowed and inflation cooled off in February. The Bureau of Economic Analysis reports that real Personal Consumption Expenditures (PCE) slipped 0.1 percent after surging 1.5 percent in January but also declining for the third time in four months. Spending on both goods and services dropped 0.1 percent, the former split between a 1.2 percent decline for durable goods and a 0.5 percent gain for nondurables. Without adjustments for inflation, nominal PCE gained 0.2 percent, funded by increases for both personal and disposable income of 0.3 percent and 0.5 percent, respectively. The savings rate continues its recent growth trend, adding 2/10ths of a percentage point to +4.6 percent. Compared to a year earlier, real disposable income has risen 3.3 percent, with spending growing 2.5 percent. The same report has the PCE price index, a closely watched measure of inflation, increasing 0.3 percent, half of its February gain. The core measure, which removes the typically volatile energy and food sectors, also advanced 0.3 percent. Over the past year, the headline price index has risen 5.0 percent, while the core measure has gained 4.6 percent. 

The Conference Board says consumers were slightly more confident in March. Their consumer confidence indexadded 8/10ths a point to a seasonally adjusted 104.2 (1985=100). The current conditions lost 1.9 points to 151.1, while the expectations measure rose by 2.6 points to 73.0. The press release notes that the latter has failed 12 over the past 13 months to clear 80.0, “which often signals a recession with the next year.” The group also noted that consumers under 55 and those earning over $50,000 were likelier to indicate “an improved outlook.” The survey results also suggested that consumers indicated that they would spend less on “highly discretionary” categories. 

The University of Michigan says the opposite. The Index of Consumer Sentiment shed 5.0 points in March to a seasonally adjusted 62.0 (1966Q1=100). This was the measure’s lowest reading since last December and its first decline in four months. Both the current and expected conditions indices fell, with the former losing 3.4 points to 66.3 and the latter shedding 5.5 points to 59.2. The press release notes that “consumers increasingly expect a recession ahead,” with lower-income respondents particularly pessimistic. Also falling were inflation expectations, with anticipated one-year price increases at 3.6, down a half-point from February.

The U.S. economy expanded at a moderate pace as 2022 ended. The third estimate of Gross Domestic Product (GDP) has the economy growing at a seasonally adjusted annualized rate (SAAR) of 2.6 percent during Q4. The Bureau of Economic Analysis previously estimated that GDP grew 2.7 percent. The U.S. economy expanded 2.1 percent in 2022, down from 2021’s 5.9 percent surge. Industries making the biggest positive contributions to Q4 growth were professional/scientific/technical services, retail, durable goods manufacturing, and mining. Drags on GDP included finance/insurance, real estate, and construction. The same report finds corporate profits declining 2.0 percent during the quarter to a seasonally adjusted annualized rate of $2.940 trillion.

Contract signings to purchase a home grew for a third straight month in February. The National Association of Realtors’ Pending Home Sales Index (PHSI) grew 0.8 percent to a seasonally adjusted 83.2 (2001=100). The PHSI remained 22.1 percent below year-ago levels. The index, which measures signed home purchase contracts, grew in the Northeast, South, and Midwest but declined in the West. All four Census regions experienced double-digit percentage declines over the past year. The press release declared that “the housing sector’s contraction is coming to an end.” 

Other U.S. economic data released over the past week:

  • Jobless Claims (Week ending March 25, 2023, First-Time Claims, seasonally adjusted): 198,000, +7,000 vs. the previous week, +27,000 vs. the same week a year earlier). 4-week moving average: 198,250 (+11.4% vs. the same week a year earlier). 
  • FHFA Home Price Index (January 2023, Purchase-Only Index, seasonally adjusted): +0.2% vs. December 2022; +5.3% vs. January 2022. 
  • S&P Case-Shiller (January 2023, National Index, seasonally adjusted): -0.2% vs. December 2022; +3.8% vs. January 2022. 
  • Agricultural Prices (February 2023, Prices Received by Farmers, not seasonally adjusted): +1.7% vs. January 2023; +5.7% vs. February 2022. 

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.

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