Consumer Confidence sags in February

The Conference Board reported that the Consumer Confidence Index fell in February to 106.7, down from a revised reading of 110.9 in January. 

The February decline arrives after three straight months of gains. 

But the Conference Board said that after January was revised downward from the preliminary reading of 114.8, the data now suggests there was not a material breakout to the upside in confidence at the start of 2024.

The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—fell back to 147.2  in February from 154.9 in January. 

The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—slipped to 79.8 from a revised 81.5 in January. An Expectations Index reading below 80 often signals recession ahead, according to the Conference Board.

“The decline in consumer confidence in February interrupted a three-month rise, reflecting persistent uncertainty about the US economy,” said Dana Peterson, chief economist at The Conference Board. “The drop in confidence was broad-based, affecting all income groups except households earning less than $15,000 and those earning more than $125,000. Confidence deteriorated for consumers under the age of 35 and those 55 and over, whereas it improved slightly for those aged 35 to 54.”

Consumer expectations for the next six months declined in February, driven by renewed pessimism regarding future business and labor market conditions, the Conference Board said. Consumers were also a bit less optimistic about their family financial situation over the next six months (a measure not included in calculating the Expectations Index). Additionally, consumers’ Perceived Likelihood of a US Recession over the Next 12 Months picked back up after falling over the previous three months.

On a six-month basis, buying plans for autos, homes, and big-ticket appliances dipped slightly. The share of consumers planning a vacation over the next six months also declined. Expectations that interest rates will rise over the year ahead picked up slightly to 42.7 percent, which may have influenced buying plans.

“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,” Petersen added. “But they are more concerned about the labor market situation and the US political environment.”