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Consumer sentiment drops for 1st time since August


This news story was published on March 18, 2012.
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By Ruth Mantell, MarketWatch –

WASHINGTON — Consumer sentiment in March declined for the first time since August as rising gasoline prices contributed to a downturn in expectations, according to a key gauge released Friday.

The University of Michigan and Thomson Reuters said sentiment fell to 74.3 in a preliminary reading for March from a final level of 75.3 for February.

Opposing forces are affecting consumers — jobs reports are positive and stocks are gaining, but gasoline prices are also rising.

“Households are balking at higher gasoline prices,” said Paul Dales, senior U.S. economist at Capital Economics, a London-based research firm. “The continued rally in equity prices is now being more than offset by the jump in gasoline prices.”

Higher gas prices helped drive one-year inflation expectations to 4 percent in March from 3.3 percent in February, according to the gauge. Elsewhere Friday, the government reported that the cost of living is accelerating, with sharply higher gas prices.

The sentiment gauge, which covers how consumers view their personal finances as well as business and buying conditions, averaged about 87 in the year before the start of the most recent recession.

Analysts watch sentiment data to get a feel for the direction of consumer spending. Economists polled by MarketWatch had expected a March reading of 76.5.

The University of Michigan’s barometer of consumers’ expectations for the economy decreased to 68 in March from 70.3 in February. Meanwhile, a gauge of views on current conditions increased to 84.2 from 83.

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