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Wednesday, March 28, 2012

Consumer Confidence Takes a Dip

Business owners would love to see a sizeable and consistent rise in consumer confidence. However, in order for that to happen, businesses and investors need to be willing to take the risks of investing in new ventures, expansion and job creation. In order for that to occur in robust fashion, however, government needs to pull back from the big spending, higher taxes and increased regulation, including in the energy arena, that have dominated so much of the policy agenda and debate over the past four-plus years.

Therefore, given the significant level of uncertainty swirling around all of these issues, it's not surprising that consumer confidence took a bit of a dip in March, and remains at low levels.

On March 27, the Conference Board's Consumer Confidence Index came in at 70.2 for March, down from 71.6 in February. The Present Situation Index actually moved up from 46.4 to 51.0, while the Expectations Index declined to 83.0 from 88.4 in February.

The story on assessing business conditions was mixed. On current business conditions, those seeing them as "good" increased from 13.7 percent to 14.3 percent, while those appraising them as "bad" increased from 31.7 percent in February to 32.7 percent. And as for the short-term outlook on business conditions, consumers expecting improvement increased from 18.9 percent to 19.2 percent, while those expecting a worsening also increased from 11.8 percent to 13.5 percent.

As for the assessment of the current jobs situation, those saying jobs were plentiful went from 7.0 percent to 9.4 percent, while those declaring that jobs are "hard to get" also went up from 38.6 percent to 41.0 percent. Looking ahead, the assessment of the employment picture also was more negative compared to the previous month - with those anticipating more jobs decreased from 18.8 percent to 17.3 percent, and those expecting fewer jobs rose from 16.4 percent to 18.3 percent.

All of these levels, of course, are anything but positive. In fact, consumer confidence remains at depressed levels, especially compared to where it should be, for example, at this point in an economic recovery. And looking ahead, anti-growth policymaking puts a host of issues in question, including the overall level of economic growth, energy costs, and job creation.

If we want consumer confidence up, then U.S. policymakers needs a dramatic shift towards pro-growth policies of smaller government, further opening up of international markets and opportunities, and real and permanent tax and regulatory relief.


Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is “Chuck” vs. the Business World: Business Tips on TV.

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