The consumer confidence index in the U.S. rose to 109.7 index points in March, according to the monthly survey published by the Conference Board (CB). The performance shot way above the moderate climb of 90.4 index points that was recorded a month prior, and it exceeded the consensus forecasts projecting a much more moderate upsurge to 96.9 index points in March.
This represents the best performance on record in over a year, showcasing that consumer confidence in the U.S. has returned to its pre-coronavirus peaks. The substantial climb is mostly owing to the American Rescue Plan of Joe Biden and his cabinet, as the fiscal stimulus package expectedly bolstered spending.
#ConsumerConfidence rose especially sharply in March among lower-income households:— The Conference Board (@Conferenceboard) March 30, 2021
• $15k-24,999: 82.9 (+25.8 pts vs Feb)
• $25k-34,999: 102.9 (+27.3)
• $35k-49,999: 115.5 (+39.7)
• $50k-74,999: 108.6 (+14.3)
• $75k-99,999: 113.1 (+11.8)
• $100k-124,999: 124.3 (+20.7)
The government's fiscal agenda's impact is especially clear in relation to the sharp increase in consumer confidence observed in lower-income households.
Lynn Franco, Senior Director of Economic Indicators at the Conference Board, commented on today's economic findings:
"Consumers’ assessment of current conditions and their short-term outlook improved significantly, an indication that economic growth is likely to strengthen further in the coming months. Consumers’ renewed optimism boosted their purchasing intentions for homes, autos and several big-ticket items."
The sharp increase in consumer confidence that the CB observed resonates with the recent findings of the University of Michigan in relation to headline consumer sentiment.
Despite these overwhelmingly positive developments, however, the trend could be reversed soon. Rising prices, which have already caused a minor commotion in the energy market, are likely to stymie consumer demand as inflation continues to increase.
In turn, this could affect the underlying demand pressures that are currently observed on the EURUSD pair. As can be seen on the 4H chart below, the currency pair continues to depreciate, as per the expectations of our last analysis, though there is a possibility for a minor bullish pullback.
The chart itself demonstrates the potential reversal points for such a pullback, while the underlying momentum remains ostensibly bearish.