Consumer sentiment in March has fallen less than initially forecast according to the latest University of Michigan (UoM) consumer sentiment index released on Friday. The UoM index dropped from 101 in February to 95.9 in March, slightly outperforming estimates. The current conditions gauge fell to 112.5.
Key Takeaways
- The UoM consumer sentiment index gauged consumer confidence at 95.9, above expectations of 95 but still at a 5-month low.
- Current conditions are at 112.5, only slightly down from 114.8 in February.
- The data indicates that US consumers are, for the time being, relatively unconcerned about the coronavirus outbreak from an economic standpoint.
American consumers have voiced muted concerns over the impact of the coronavirus outbreak on the US economy and on their own ability to spend. Consumer confidence and current conditions came away with robust readings that defied expectations. The expectations gauge, however, dropped from 92.1 to 85.3. Sentiment has been relatively high over the last six months, in tandem with the gradual deescalation of trade tensions with China.
The survey was conducted from February 26 onwards, covering events such as a major stock market sell-off, the declaration of a global pandemic, and the Federal Reserve implementing the emergency interest rate cut since the 2008 financial crisis. However, sentiment is still at a 5-month low, and may change as the coronavirus situation continues to unfold.
Expert Outlook
“The initial response to the pandemic has not generated the type of economic panic among consumers that was present in the run-up to the Great Recession,” said University of Michigan director Richard Curtin. “Nonetheless, the data suggest that additional declines in confidence are still likely to occur as the spread of the virus continues to accelerate.” Curtin added that the early reaction indicated that American’s view the pandemic as a temporary event, despite what public health officials are saying worldwide.
Peter Schiff, CEO of Euro Pacific Capital, commented to say "I think that people have got this wrong, everybody is looking at this event as deflationary, but it is actually the opposite. You're going to have a reduction of production, so less supply of goods, and the world is going to be flooded with money. As if this will make a difference, it's just going to make a bad situation worse."
Market Reaction
Gold prices have faced heavy selling pressure in today’s session. Spot gold last traded at 1572.98/oz, down -1.03% with a high of $1,595.79/oz and a low of $1,552.85/oz. Gold prices have seen high volatility throughout the last month as the markets panic over the outbreak. The recent sell-off could be due to traders cashing in gains on gold to offset losses in other markets.
Gold Price Chart
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