Consumer confidence falls to 70.5 in March, a 16-year low

U.S. consumer confidence fell to a 16-year low in March 2008, as inflation and recession concerns continued to weigh on consumers, the Reuters/University of Michigan Survey of Consumers announced Friday.

The Reuters/University of Michigan consumer sentiment index fell to 70.5 in March 2008 (preliminary statistic) from 70.8 in February 2008. It's the lowest reading for the index since February 1992.

Economists surveyed by Bloomberg News had expected the index to decline to 69.5.

The expectations index, which some economists and analysts say is a lead indicator regarding future consumer spending, fell to 61.4 in March 2008 from 62.4 in February 2008.

Also, consumers surveyed said they expect inflation to run at a 4.5% annualized rate in 2008, compared to a 3.6% annualized rate projected in February 2008.

Economic Analysis: The key dimension of the March 2008 Reuters/UMich. survey is the 16-year low for the sentiment index. Rising energy prices, news of continued stress in credit markets, the housing market's decline, and low/negative job growth are all weighing on consumers, and the survey data reflect the above. The reading also suggests big-ticket retail sales -- an important component of U.S. economic activity -- may have a tough time recovering in the immediate months ahead, as consumers typically delay/cancel purchases of big-ticket items during periods of low consumer confidence.