NEW YORK (AP) — Economists say worries about gas prices are pulling consumer confidence down from a three-year high that it reached in February after five months of improvement.
The Conference Board's Consumer Confidence Index for March, being released Tuesday, is expected to fall to 65.4 from February's figure of 70.4 as shoppers take account of the way price increases, particularly for gasoline, are eating up their income.
The index measures how Americans feel about business conditions, the job market and the next six months. It hovered in a tight range from the high 50s to low 60s last year. A reading of 90 indicates a healthy economy, and the index hasn't approached that level since the recession began in December 2007.
Signs of financial strain emerged Monday in February's consumer spending report, which showed that most of the 0.7 percent jump in spending went to cover higher gas prices. Although personal income rose 0.3 percent for February, after-tax incomes actually fell 0.1 percent after adjusting for inflation.
Economists monitor confidence because consumer spending, including big-ticket items like health care, accounts for about 70 percent of U.S. economic activity and is critical for a strong rebound.
The government's February job report, released this month, showed companies added more workers in February than in any month in almost a year, and unemployment fell to 8.9 percent, the lowest rate in almost two years.
But higher oil prices, violence in the Middle East and North Africa and Japan's nuclear crisis could frighten U.S. companies out of taking any risks, says Mark Vitner, a senior economist with Wells Fargo. The rising prices also will cut into a broadening swath of household budgets, leaving shoppers with less to spend on discretionary purchases like eating out.
The national average for a gallon of gas hit $3.584 Monday, the highest price ever for this time of year, according to AAA, Wright Express and the Oil Price Information Service. Gasoline prices have jumped 25.1 cents in the last month and 78.1 cents from a year ago.
Further burdening consumers are rising food and clothing prices and a problematic housing market.
And Friday, the Commerce Department said new-home sales plunged in February, the third month in a row. Overall home sales rose, according to a report Monday from the National Association of Realtors, but the sales were uneven geographically and insufficient to signal a turnaround.
The Conference Board survey, conducted by The Nielsen Co., is based on a random survey mailed to 3,000 households from March 1 through March 16.