The consumer confidence survey from the Conference Board on Tuesday also suggested that Americans were getting ready to hunker down as dark clouds gather, with the share of them planning to buy major household appliances over the next six months falling to the lowest level since 2011.
"Rates have been on the rise for over a year, and we're seeing the effects," said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto. "Despite a still-tight jobs market, which is still a good thing, sticky inflation does have its consequences." Though consumers' assessment of current conditions improved, their short-term outlook deteriorated. The short-term outlook measure has dropped below the level associated with a recession in the next year in 13 of the last 14 months.The risks of a downturn have risen following the collapse of two regional U.S. banks in March, which tightened credit conditions. A looming fight to increase the federal government's $31.4 trillion borrowing cap also poses a threat to the economy.
This measure correlates to the unemployment rate from the U.S. Labor Department. The jobless rate was 3.5% in March. The share of those planning to go on vacation was the smallest since last June. Fewer consumers intended to purchase a home. Some economists, however, cautioned against reading too much into the drop in buying plans.