Confidence among U.S. consumers unexpectedly dropped in March, a sign rising fuel costs may be starting to weigh on the economic outlook.
The Thomson Reuters/University of Michigan preliminary index of consumer sentiment fell to 74.3, the lowest this year, from 75.3 the prior month. The gauge was projected to rise to 76, according to the median forecast of 70 economists surveyed by Bloomberg News.
Gasoline prices are up 17 percent since the beginning of the year and further gains may become a bigger strain on Americans’ pocketbooks. While the job market is healing, faster hiring and sustained gains in confidence are needed to lift consumer spending, which accounts for about 70 percent of the economy.
“Consumers are pretty stretched at this point,” Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida, said before the report. “Gasoline prices are limiting purchases. Inflation-adjusted incomes are still very weak. There are a lot of strains on consumers.”
Today’s report contrasts with the Bloomberg Consumer Comfort Index, released yesterday, which rose last week to the highest level in four years.
© Copyright 2013 Bloomberg News. All rights reserved.