The Conference Board Consumer Confidence Index fell in February to 106.7 points, below the 110.9 revised in January. The index’s decline in February came after three consecutive months of gains. However, with January revised down from the preliminary reading of 114.8, the data now suggests there was no major break to the upside in sentiment in early 2024.
“The decline in consumer confidence in February snapped a three-month rise, reflecting persistent uncertainty about the U.S. economy,” said Dana Peterson, chief economist at The Conference Board.
“The drop in confidence was widespread and affected all income groups except households earning less than $15,000 and those earning more than $125,000. Confidence deteriorated for consumers under 35 and those 55 and older, while it improved slightly for those 35 and older. at 54″, added Peterson
The Conference Board, the think tank that provides economic insight into what’s to come, notes that written responses from February revealed that while headline inflation remained consumers’ top concern, they are now slightly less concerned about food and gas prices, which have decreased in recent months. But they are more concerned about the job market. situation and the American political environment.
On the other hand, the Current Situation Index, based on consumers’ assessment of current business and labor market conditions, fell to 147.2 in February from 154.9 in January. While the expectations index, based on consumers’ short-term outlook for income, business and labor market conditions, fell to 79.8, down from a revised 81.5 in January. An Expectations Index reading below 80 often indicates that a recession is looming.
Assessments of the current situation weakened in February, as consumer opinions on both business conditions and the employment situation became less favorable. In addition, consumers’ assessments of their personal financial situation (a measure not included in the calculation of the Current Situation Index) also weakened.
The report indicates that consumer expectations for the next six months deteriorated in February, driven by renewed pessimism about future business and labor market conditions.
Consumers were also slightly less optimistic about their family’s financial situation over the next six months. Additionally, consumers’ perceived likelihood of a U.S. recession over the next 12 months rebounded after falling over the previous three months.
Semi-annually, plans to purchase expensive cars, homes and appliances decreased slightly. The proportion of consumers planning a vacation over the next six months also decreased.
Expectations that interest rates will rise over the next year rose slightly to 42.7%, which may have influenced purchase plans. Meanwhile, consumers remained optimistic about stock prices over the next year.
Average 12-month inflation expectations fell again to 5.2% in February. After peaking at 7.9% in mid-2022, expected inflation has now fallen to its lowest level since March 2020, when it stood at 4.5%.
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