ColumnistsFeb 21, 2024
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Consumer Confidence Dips in February Amid Uncertainty
The Conference Board’s revised January reading suggests consumers did not start off 2024 as confidently as previously thought.
The Conference Board’s consumer confidence index fell to 106.7 in February as consumers grappled with economic uncertainty.
New York—U.S. consumer confidence took a tumble in February following three months of consecutive increases as concerns mount over economic uncertainty.
The Conference Board’s consumer confidence index fell to 106.7 in February, down from a revised 110.9 in January.
The previous January reading of 114.8 marked consumer confidence’s highest level since December 2021.
The revision “suggests there was not a material breakout to the upside in confidence at the start of 2024.”
The decline in consumer confidence in February reflects “persistent uncertainty about the U.S. economy,” said Dana Peterson, chief economist at The Conference Board.
The confidence dip was broad-based, she said, affecting all income groups except households earning less than $15,000 and those earning more than $125,000.
The dip was felt by those under the age of 35 and those 55 and over, while confidence improved slightly for those aged 35 to 54.
“February’s write-in responses revealed that while overall inflation remained the main preoccupation of consumers, they are now a bit less concerned about food and gas prices, which have eased in recent months,” said Peterson. “But they are more concerned about the labor market situation and the U.S. political environment.”
The Present Situation Index, which measures consumers’ current view of business and labor market conditions, fell to 147.2 in February from 154.9 in January.
The dip was attributed to consumers’ views of business conditions and the employment situation.
Their views on their personal finances, which are not factored into the Present Situation Index, were also more pessimistic.
Consumers’ view of current business conditions was more pessimistic in February, with the percentage of respondents who said current business conditions are “good” mostly flat at 21 percent, while those who said conditions are “bad” increased to 17 percent from 15 percent.
Consumers also had a less optimistic view of the current labor market.
The percentage of respondents who felt jobs were plentiful was down to 41 percent from 43 percent, while 14 percent said jobs were “hard to get,” up from 11 percent last month.
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The Conference Board’s consumer confidence index fell to 106.7 in February, down from a revised 110.9 in January.
The previous January reading of 114.8 marked consumer confidence’s highest level since December 2021.
The revision “suggests there was not a material breakout to the upside in confidence at the start of 2024.”
The decline in consumer confidence in February reflects “persistent uncertainty about the U.S. economy,” said Dana Peterson, chief economist at The Conference Board.
The confidence dip was broad-based, she said, affecting all income groups except households earning less than $15,000 and those earning more than $125,000.
The dip was felt by those under the age of 35 and those 55 and over, while confidence improved slightly for those aged 35 to 54.
“February’s write-in responses revealed that while overall inflation remained the main preoccupation of consumers, they are now a bit less concerned about food and gas prices, which have eased in recent months,” said Peterson. “But they are more concerned about the labor market situation and the U.S. political environment.”
The Present Situation Index, which measures consumers’ current view of business and labor market conditions, fell to 147.2 in February from 154.9 in January.
The dip was attributed to consumers’ views of business conditions and the employment situation.
Their views on their personal finances, which are not factored into the Present Situation Index, were also more pessimistic.
Consumers’ view of current business conditions was more pessimistic in February, with the percentage of respondents who said current business conditions are “good” mostly flat at 21 percent, while those who said conditions are “bad” increased to 17 percent from 15 percent.
Consumers also had a less optimistic view of the current labor market.
The percentage of respondents who felt jobs were plentiful was down to 41 percent from 43 percent, while 14 percent said jobs were “hard to get,” up from 11 percent last month.
The Expectations Index, which measures consumers’ outlook for income, business, and labor market conditions in the near future, fell to 79.8 from the downwardly revised 81.5 in January.
Notably, an Expectations Index reading below 80 often signals recession ahead, said the Conference Board.
“Consumer expectations for the next six months deteriorated in February, driven by renewed pessimism regarding future business and labor market conditions,” it said.
Looking at short-term business conditions, respondents’ outlooks were more pessimistic, with 15 percent of respondents expecting business conditions to improve, down from 17 percent in January, while the number of respondents that expect them to worsen was virtually flat.
Consumers’ assessment of the short-term labor market outlook in February was more pessimistic.
The percentage of respondents who expect more jobs to be available was 15 percent, down from 17 percent in January, while the number of respondents who expect fewer jobs to be available essentially held at 17 percent.
Consumers’ short-term income expectations were somewhat more optimistic.
The number of respondents who expect their incomes to increase was virtually flat. However, fewer respondents (11 percent) expect their incomes to decrease, down from 13 percent.
Respondents also were more pessimistic about their family financial situation over the next six months, a measure not included in the Expectations Index.
The measure “Consumers’ Perceived Likelihood of a US Recession Over the Next 12 Months” was up after falling over the previous three months.
Expectations that interest rates will rise in the year ahead also increased slightly, which can influence customers’ plans to make purchases.
On a six-month basis, plans to buy automobiles, homes, and big-ticket appliances were down slightly.
The number of consumers planning a vacation over the next six months also declined.
However, the percentage of consumers who expect continued inflation over the next 12 months reached its lowest level since March 2020.
“This aligns with continued slowing in consumer price inflation in government reports and fewer complaints about food and energy prices in our survey,” said the Conference Board.
The Conference Board is scheduled to release its results for March on the 26th of the month.
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