In addition, more corporate layoff announcements, particularly from tech companies, are likely to pepper the media in coming months as companies struggle to bolster sagging earnings and reassure investors. With the economic environment as uncertain as it has been in recent months, the expectations component of the consumer confidence index could be in for some large swings. While ample uncertainty still exists, the situation would undoubtedly look much worse today if consumer confidence had continued its descent in March. The fact that confidence did not decline further was more important than the magnitude of the increase. Wall Street recognized the importance of this glimmer of hope and welcomed the news of a turnaround in consumer confidence with its characteristic alacrity.
Confidence is the key difference between a soft economy and a recessionary one.
If confidence is lost, then investors and lenders stop providing credit, businesses stop investing, and consumers stop spending. If confidence is maintained, then investing, lending, and spending growth, at worst, only slow. While the economy is facing uncertainty, a number of factors, which weighed on confidence during winter months, are abating. There is a chance that equity prices have bottomed out, and the high heating bills that consumers have been paying will lessen with the coming of spring. Home heating costs were nearly double this winter compared to a year ago.