The University of Michigan's final index of consumer sentiment for March fell for a third straight month to 77.6, its lowest since September 1993, from 79.9 in February.
That was better than a mid-month reading of 75.0 and a 75.3 forecast by economists, perhaps helped by optimism after early successes of U.S.-led forces, analysts said. The expectations index also rose from its mid-month level even as attitudes about the current state of the economy soured further.
Most of the responses compiled for the final March survey were taken before the battle in Iraq bogged down, and analysts said April's measure of sentiment would better reflect the impact on confidence from subsequent casualties and the war's slowing progress.
Continuing erosion in confidence has taken its toll on spending, with retail sales, auto sales and even the robust housing market all showing signs of weakening. A persistent retrenchment by consumers could tip the economy back into recession.
But for the most part, consumers have stayed resilient, leaning on extra income generated by refinancing mortgages to take advantage of low interest rates, even as businesses struggle to shake off the hangover from the previous boom.
