The University of Michigan's consumer sentiment index slipped to 93 this month from 95.4 in February. Richard Curtin, chief economist for the survey, notes that consumer optimism was the highest in a decade for the first three months of 2015 despite the dip in March.
Sentiment shot up to an 11-year high in January, then retreated modestly in February and March. One reason for the pullback: Gasoline prices have been ticking back after a sharp drop in the second half of 2014. Gasoline costs an average $2.43 a gallon, up from low of $2.03 a gallon in late January; but prices at the pump are still down from $3.54 a year ago, according to AAA.
The March drop in confidence was caused entirely by falling confidence among low-income households, which are especially sensitive to high utility bills in the winter. Confidence rose for mid- and high-income households. Another gauge of consumers' spirits, the Conference Board's confidence index, slipped slightly in February but remained near the highest levels since before the Great Recession.
Michigan's Curtin predicted that an improving job market would boost consumer spending the rest of the year.
The Commerce Department reported Friday that consumer spending rose at a 4.4 per cent annual rate from October through December, the fastest pace since the start of 2006. Overall, the U.S. economy grew at a 2.2 per cent pace the last three months of 2014, down from 5 per cent from July through September.