Proving that how one feels don’t necessarily translate to how they act, the first look at March U of M confidence fell to 72.5 from 73.6 and matches a 4 month low and is 1.5 pts below expectations. Both Current Conditions and the Outlook fell. One year inflation expectations rose .1% to 2.8%, matching the highest since Oct ’09, likely due to the slow creep higher in gasoline prices which last night hit a fresh 17 month high. The key to confidence is the labor market and notwithstanding the improvement in retail sales, the labor market picture is still uncertain. IF, however, the economy is currently turning a corner in a sustainable way rather than seeing some reversion to the mean after the late ’08-early ’09 earthquake, employment will pick up and confidence will follow.
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