New York Signs of life in consumer spending are sprouting this spring.
A partial rebound in consumer confidence, a positive report on January home prices and an expected strong March from retailers suggest Americans are cautiously perking up.
The Conference Board said Tuesday its Consumer Confidence Index rose to 52.5 in March, recovering about half of the nearly 11 points it lost in February. Analysts expected a reading of 50 for March, but the index is still far below the 90 reading that’s considered healthy.
February’s 46.4 marked the lowest level since April 2009 and also erased three consecutive months of improvement. In January, the reading was 56.5.
Economists watch the figures closely because consumer spending, including health care and other major expenses, accounts for about 70 percent of U.S. economic activity and is critical to a strong economic recovery.
“We’re a lot better off, but we have a lot more improvement to go,” said Michael P. Niemira, chief economist at the International Council of Shopping Centers. He said shoppers have “more willingness to spend” and are starting to trade back up in areas where they had cut back.
Separately, the Standard & Poor’s/Case-Shiller 20-city home price index showed prices rose 0.3 percent from December to January, the eighth consecutive monthly gain. Among the 20 cities in the index, 12 rose. But there’s some worry the momentum in the housing market won’t be sustained. Home sales sank during the winter, and government incentives that have propped up the market are ending.
Meanwhile, merchants are expected to report a 3.5 percent gain for March when they release sales figures next week, according to Niemira’s estimate, which was upgraded from his original 2.5 percent projection. The figure is based on sales at stores open at least a year, considered a key indicator of a retailer’s health.
Retailers reported a 3.7 percent increase for February, marking the biggest increase since November 2007, a month before the recession began.
The index excludes Wal-Mart Stores Inc., the world’s largest retailer, which stopped reporting sales figures on a monthly basis.