Consumer confidence slips in February

Consumer confidence fell into a slump in February, driven largely by a less optimistic view of business conditions.

According to the Conference Board, the index currently stands at 92.2, down from 97.8 in January.

“Consumer confidence decreased in February, after posting a modest gain in January,” said Lynn Franco, director of economic indicators at The Conference Board. “Consumers’ assessment of current conditions weakened, primarily due to a less favorable assessment of business conditions. Consumers’ short-term outlook grew more pessimistic, with consumers expressing greater apprehension about business conditions, their personal financial situation, and to a lesser degree, labor market prospects. Continued turmoil in the financial markets may be rattling consumers, but their assessment of current conditions suggests the economy will continue to expand at a moderate pace in the near-term.”

The Present Situation Index declined from 116.6 to 112.1, with the percentage saying business conditions were “good” down from 27.7% to 26.0%. Those saying business conditions are “bad” increased from 18.8% to 19.8%. As for the labor market, those claiming jobs are “plentiful” decreased from 23.0% to 22.1%, while those claiming jobs are “hard to get” rose to 24.2% from 23.6%.

Meanwhile, the Expectations Index decreased from 85.3 to 78.9 in February. The percentage of consumers expecting business conditions to improve over the next six months declined from 15.9% to 14.6%, while those expecting business conditions to worsen increased from 10.7% to 12.0%. Consumers’ outlook for the labor market was less optimistic. Those anticipating more jobs in the months ahead decreased from 13.4% to 12.2%, while those anticipating fewer jobs increased slightly from 17.0% to 17.2%. The proportion of consumers expecting their incomes to increase declined from 18.6% to 17.2%, while the proportion expecting a reduction in income increased from 10.7% to 12.5%.