On Mar 27, the Conference Board reported U.S. consumer confidence data for the month of March. In February, consumer confidence index was at its 18-years high. Although the data shows a moderate dip from the previous month, primarily due to stock market fluctuations, it still remains at a strong level.

The expected improvement in income, jobs and after-tax pay of U.S. consumers are most likely to offset worries about rising interest rates and stock market volatility. A robust job market, massive tax cuts and solid economic data are likely to increase consumer spending in the months to come. At this stage, investment in consumer discretionary stocks with a favorable Zacks Rank will be a prudent move.

Moderate Dip in March Data

For March 2018, the Conference Board’s measure of consumer confidence index stands at 127.7 compared with 130.0 in February, which was the highest in 18 years. March’s reading also came in below the consensus estimate of 130.4. The Present Situation index plummeted from 161.2 to 159.9, while the Expectations index dropped from 109.2 last month to 106.2 this month.

Persistence of volatility in the stock market, expectation of a global trade war followedby President Trump’s Tariff policies and anticipation of an aggressive interest rate hike by the Fed led to the marginal decline in the consumer confidence index.

However, March’s reading of 127.7 was the second highest since the November 2017 index of 128.6. Notably, the reading for March 2017 was just 124.9.

U.S. Economy on Strong Footing

Recession is unlikely to occur as the U.S. economic fundamentals remain healthy. Several important macro-economic reports released in this month indicate as much.

U.S. economy added 313,000 jobs in February 2018, exceeding the consensus estimate of 208,000. Moreover, the total labor force stands slightly below 162 million. This was the highest since September 2003.

The Department of Commerce’s data showed that new orders for durable goods increased 3.1% in February after declining for two straight months. Orders for non-defense capital goods, excluding aircraft, grew 1.8%, reflecting biggest gain in five months. Core capital goods shipments increased 1.4%, the largest increase experienced since December 2016.

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