ANN ARBOR, Mich—Consumer confidence began to revive as soon as the war started due to falling gas prices and rising stock prices, according to Richard Curtin, the Director of the University of Michigan’s Surveys of Consumers. Importantly, the current state of consumer confidence remains volatile given the widespread anxiety about how long the war will last, the potential number of casualties, and the possibility of domestic terrorist attacks. Curtin added that “The successful completion of the war will not be sufficient to reestablish confidence. The full restoration of consumer optimism will depend on a sustained revival in job and wage prospects.” The Index of Consumer Sentiment was 77.6 in the March 2003 survey. While the Sentiment Index was slightly below the 79.9 recorded in February 2003, the size of the March decline was cut in half by the gains recorded since the war started. The Index of Consumer Expectations, a closely watched component of the Index of Leading Economic Indicators, was 69.6 in March, nearly identical to the 69.9 recorded in February 2003. Although the decline in the Expectations Index came to a halt since the war began, the Expectations Index is nonetheless 25% below the level it was a year ago in the March 2002 survey. Consumer confidence did surge following the end of the first war with Iraq, but the improvement was not sustained. “Following the largest one-month gain ever recorded in March of 1991, consumer confidence ended 1991 at a lower level than it was just before the surge. Then as now, consumers identified slumping job prospects as their main concern,” said Curtin. “While the spending rate can be expected to improve in the second half of 2003, the pace of gains will remain sluggish as consumers expect a slow and uneven rebound in jobs and wages and report a greater desire to repay debts and rebuild their savings and reserve funds,” Curtin added. Consumers judged their current financial situation quite unfavorably in March due to higher energy prices as well as lower incomes. Consumers reported their bleakest assessments of their current finances in more than ten years in the March 2003 survey, according to Curtin. Nearly as many consumers reported income declines as income gains in March. While consumers expected some relief from declines in gas prices, consumers did not anticipate any renewed growth in jobs and wages during the year ahead. “Consumers expected job losses to continue to mount during the months ahead, as they expected the unemployment rate to move toward 6¼% by mid year,” Curtin said. “Although near-term prospects for the national economy were marginally more favorable by the end of March than in February, consumers’ buying plans for homes and vehicles grew less positive throughout the month,” Curtin noted. Home buying plans recorded the largest decline in March, and vehicle buying plans slumped at the end of the month. Rising uncertainty about future job and wages prompted the more cautious spending plans among consumers.