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The Latest ANALYTICS Or ig i nat ion Money Best Left in Wallets, Not Stores Deloitte released new information that consumer spending was decidedly dormant at the end of the winter. s e r v ic i ng D Consumer Confidence Halts Because of Sequester a na ly t ic s Americans are wary of what exactly will happen when sequestering efforts get underway. F ebruary's uptick in consumer confidence turned around in March, the Conference Board reported. The Conference Board's Consumer Confidence Index, conducted for the firm by Nielsen, fell to 59.7 from February's reading of 68 (which was revised down from 69.6). The decline wiped out most of the gains observed in February and brought the index to its second lowest reading of the year. According to Lynn Franco, director of economic indicators at the Conference Board, the retreat in consumer confidence was driven primarily by a sharp decline in respondents' economic outlook, "although consumers were also more pessimistic in their assessment of current conditions," Franco said. "The loss of confidence, particularly expectations, mirrors the losses experienced this past December and January. The recent sequester has created uncertainty regarding the economic outlook and, as a result, consumers are less confident," Franco noted. The Conference Board's Present Situation Index decreased to 57.9 from 61.4. The number of those saying business conditions are "good" decreased to 16 percent from 17.6 percent previously, while those stating business conditions are "bad" increased to 29.3 percent from 28.2 percent. Consumers' assessment of the labor market was mixed. The number of those claiming jobs are "plentiful" at this time decreased (from 10.1 percent to 9.4 percent), but so did the number of respondents claiming jobs are "hard to get" (from 36.9 percent to 36.2 percent). As far as short-term outlooks go, consumers were decidedly pessimistic: The Expectations Index fell to 60.9 in March, a marked drop from 72.4 in February. Those expecting business conditions to improve over the next six months decreased to 14.4 percent from 18 percent, while those expecting business conditions to worsen increased to 18.3 percent from 16.6 percent. The outlook for the labor market was also less favorable than in February. The number of respondents expecting more jobs in the months ahead fell to 12.3 percent from 16.1 percent, while those bracing themselves for fewer jobs increased to 26.6 percent from 22.1 percent. The proportion of respondents saying they expect their incomes to increase fell to 13.7 percent (from 15.8 percent previously). The number of those expecting a decrease in income also edged down, however, falling to 18 percent from 19.3 percent. The M Report se c on da r y m a r k e t eloitte's Consumer Spending Index experienced a minor bump in February as "a decline in initial unemployment claims and a rise in real average hourly earnings offset negative forces," the company reported. The index, which tracks consumer cash flow as an indicator of future spending, rose slightly to 4 in February from a reading 3.9 in January. While the increase was relatively small, it turns around three straight months of declines. "The economic fundamentals that influence consumer spending are aligning," said Patricia Buckley, director of economic policy and analysis for Deloitte and author of the monthly index. "Financial institutions and the markets are stronger, and consumer confidence and real spending appear to be weathering the 2013 payroll tax increases fairly well. Absent the uncertainty surrounding the impact of the sequester, an economic turnaround would likely be imminent." The index comprises four components: tax burden, initial unemployment claims, real wages, and real home prices. According to Deloitte, the tax burden rose nearly 2 percent on a year-over-year basis in February to 11.29 percent. Meanwhile, first-time unemployment claims continued to trend downward to 352,750, falling more than 6 percent year-overyear. Hourly real wages increased modestly during the past three months to $8.78. At the same time, Deloitte reported a slight downtick in real new home prices. Prices fell about 0.5 percent on an annual basis to $97,925. | 61

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