Consumer confidence plummets

The Conference Board’s consumer confidence index, which had improved last month, weakened significantly in February. The index now stands at 87.3 (1985=100), down from 96.4 in January.

The expectations index fell to 96.8 from 107.8. The present situation index declined to 73.1 from 79.4.

“Consumers began the year on a high note, but their optimism has quickly given way to caution,” said Lynn Franco, director of The Conference Board’s Consumer Research Center. “Consumers remain disheartened with current economic conditions, and at the core of their disenchantment is the labor market. While the current expansion has generated jobs over the past several months, the pace of creation remains too tepid to generate a sustainable turnaround in consumers’ confidence. And, with consumers anticipating economic conditions to remain about the same in the months ahead, their short-term outlook turned less optimistic.”

Consumers’ assessment of current conditions was less positive in February than last month. Those claiming business conditions are “good” declined to 19.3 percent from 21.9 percent. Those claiming conditions are “bad” rose to 25.1 percent from 22.9 percent.

Consumers claiming jobs are “hard to get” edged up to 32.1 percent from 31.6 percent. Those saying jobs are “plentiful” dipped to 11.8 percent from 12.3 percent.

Consumers’ short-term outlook weakened significantly. Those expecting business conditions to improve in the next six months dropped to 21.8 percent from 27.6 percent. Consumers expecting conditions to worsen over the next six months rose to 8.7 percent from 6.7 percent.

The employment outlook was also less favorable. Those anticipating more jobs to become available in the next six months fell to 18.7 percent from 22 percent. Those expecting fewer jobs to become available increased to 18.1 percent from 15 percent. The proportion of consumers anticipating an increase in their incomes declined to 16.7 percent from 19.2 percent.

The consumer confidence survey, which is based on a representative sample of 5,000 U.S. households, is conducted for The Conference Board by NFO WorldGroup.