U.S consumer confidence slips sharply in March due to the Coronavirus restrictions

U.S consumer confidence slips sharply in March due to the Coronavirus restrictions

  • U.S consumer confidence drops to 120 in March from February's 132.6.
  • The present situation sub-index declined from 169.3 last month to 167.7 in March.
  • The expectations sub-index slipped to 88.2 this month from 108.1 in February.

The Conference Board Inc. released its monthly report on U.S consumer confidence on Tuesday. The data showed consumer confidence to have slipped significantly in March as people remain restricted to their homes amidst the Coronavirus pandemic.

Tuesday’s data revealed the U.S consumer confidence to have declined to 120 in March. Confidence was recorded at a much higher 132.6 in February. Economists, however, had expected an even steeper drop in the consumer confidence to 115.1 in March.

Director Lynn Franco’s Comment On Tuesday’s Data

In its statement on Tuesday, senior director Lynn Franco of the Conference Board commented:

“Consumer confidence declined sharply in March due to a deterioration in the short-term outlook. The intensification of COVID-19 and extreme volatility in the financial markets have increased uncertainty about the outlook for the economy and jobs. March’s decline in confidence is more in line with a severe contraction – rather than a temporary shock – and further declines are sure to follow.”

Johns Hopkins University’s data showed on Tuesday that over 800,000 people from across the globe have so far been tested positive. The death toll is quickly approaching 40,000 worldwide. In the U.S, over 165,000 people have been infected and the virus has so far caused more than 3,100 deaths.

Tuesday’s data also showed the present situation sub-index to have dropped to 167.7 in March from February’s 169.3. The expectations sub-index, on the other hand, saw an even wider decline from 108.1 that was recorded last month to 88.2 in March.

With the United States currently having the highest number of Coronavirus cases, the country’s leading investment bank, Goldman Sachs made a recent estimate of a massive 34% contraction in the U.S economy in 2020’s second quarter. Unemployment in the U.S, as per the bank, is expected to climb to 15% before it recovers at the fastest rate recorded in history.

Response In The Forex Market

The U.S dollar index was seen losing traction following the release of the economic data. The index declined from 99.72 to its current level of 99.19.

The subsequent response in the forex market was also significant with the EUR/USD currency pair climbing from 1.0942 to 1.11 level where it is currently trading.

EUR/USD is expected to find an intermediate resistance at 1.1010 level. Breaking above the resistance will open way for 1.1060. On the downside, the pair has created support at around 1.0920 level.

By Wajeeh Khan
Mr. Khan specialises in Public Health by academia but is a trader by passion. Taking up two new hobbies of writing and trading in his teen years, he is now a professional trader and news writer with over 5 years of experience in various financial markets. Khan is passionate about bringing insightful articles to his readers and hopes to add value to their portfolios.

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