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Consumer confidence falls amid budget concerns

March 26, 2013|By Stuart Pfeifer
  • Shoppers outside Gucci store at South Coast Plaza in Costa Mesa. Consumer spending accounts for about 70% of the economy.
Shoppers outside Gucci store at South Coast Plaza in Costa Mesa. Consumer… (Lawrence K. Ho / Los Angeles…)

Stocks and housing prices continue to rise, but consumers are not feeling all that good about the state of the U.S. economy.

Confidence among U.S. consumers fell more than forecast in March as Washington’s budget battle soured Americans’ views of the economic outlook, Bloomberg News reported.

The Conference Board’s index declined to 59.7 from a revised three-month high of 68 in February, the New York-based private research group reported Tuesday. Economists surveyed by Bloomberg had projected the March measure would fall to 67.5.

Concern mounted that sweeping cuts in planned government spending may slow the economy’s growth and curtail progress in the jobs market. At the same time, record stock prices and a housing rebound that’s helping shore up household balance sheets may support consumer spending that accounts for about 70% of the economy.

“So far the consumer has been fairly resilient, but I think the impact of higher taxes is still to come,” Ryan Sweet, a senior economist at Moody’s Analytics Inc. said. “Some of the brinkmanship in Washington over the last few months may dampen consumers’ expectations.”

Those expecting business conditions to improve in the next six months declined to 14.4% in March, the smallest share since November 2011, from 18% the prior month.

“The recent sequester has created uncertainty regarding the economic outlook and as a result, consumers are less confident,” said Lynn Franco, director of economic indicators at the Conference Board, said in a statement.

The share of consumers expecting more jobs to become available in the next six months slumped to 12.3% in March, the worst reading since October 2011, from 16.1% in February.

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