U.S. consumer confidence took another hit in March as Americans’ anxiety mounted during the run-up to war with Iraq, according to a survey taken before hostilities began.

The Consumer Confidence Index, which declined sharply in February, fell again in March, the U.S Conference Board reported Tuesday. The index fell to 62.5 in March from an upwardly revised 64.8 in February.

Higher oil prices and a stagnant jobs market weighed on sentiment. It was the fourth consecutive monthly decline. The index remains at its lowest level since late 1993.

“While a quick and successful outcome in the Middle East conflict would certainly ease some of the uncertainties facing consumers and therefore boost confidence, it is the economic fundamentals that will determine whether a rebound is sustainable,” said Lynn Franco, director of the Conference Board’s Consumer Research Center.

“The end of the Gulf War in 1991 produced a surge in confidence, but labor market conditions quickly diminished the spark. So if history repeats itself, the current job scenario will do little to maintain any post-war surge in confidence.”

Consumers’ appraisal of the current business environment mirrored last month’s readings. Those rating present business conditions as “bad” remained virtually unchanged at 29.8%. Those holding the opposite view accounted for 13.8%. Consumers reporting jobs are hard to get rose to 32.3% from 30%. Those claiming jobs are plentiful remained relatively flat at 11.6%.

Consumers’ short-term expectations are more pessimistic than last month. Those anticipating that business conditions will worsen over the next six months edged up to 19.9% from 19.1%. Consumers anticipating an improvement fell to 13.3% from 14.9%.

The employment outlook fared no better. Consumers anticipating more jobs to become available in the next six months declined to 11.1% from 12.4%. Those expecting fewer jobs, however, dropped to 26.1% from 28.5%. Consumers anticipating an increase in their incomes declined slightly to 15.8%, from 16% last month.

“The figures are weak, but they do not necessarily help us predict where confidence will be in the event of a successful conclusion to the war by, say, the middle of next month,” says BMO Nesbitt Burns.

“After the previous Gulf War concluded, confidence surged. The equity market rally last week told us what will likely happen again if all goes well.”

Nesbitt says that the consumer confidence figures are not of great consequence for the markets. “They were close to expectations and “pre-war.” At issue is the size of the post-war bounce and, frankly, the February and March data simply do not help us much,” it says.

RBC Financial says, for another read on the mood of consumers, look at
February existing homes sales in the U.S., which dipped modestly to 5.84
million from an upwardly revised level of 6.1 million in January. “Home sales remain at elevated levels despite the deterioration in consumer confidence — a pattern that has been in evidence for many months. On balance the pace of consumer spending appears to have been little altered in the lead-up to war. A determination of whether this pattern will survive contact with actual war will have to await the March data,” it concludes.