Latest consumer confidence numbers end 3-month gain streak

WASHINGTON — Consumer confidence fell in February to 106.7 (1985=100), down from a revised 110.9 in January, according to the Conference Board’s latest Consumer Confidence Index. February’s decline in the index occurred after three consecutive months of gains.

“The decline in consumer confidence in February interrupted 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 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.”

However, as January was revised downward from the preliminary reading of 114.8, the data now suggest that 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 (1985=100) 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 (1985=100), down from a revised 81.5 in January. Per the Consumer Confidence Board, an Expectations Index reading below 80 often signals recession ahead.

“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,” added Peterson. “But they are more concerned about the labor market situation and the U.S. political environment.”

Assessments of the present situation weakened in February, as consumers’ views of both business conditions and the employment situation became less favorable. Furthermore, consumers’ assessments of their personal financial situation (a measure not included in calculating the Present Situation Index) also weakened.

Consumer expectations for the next six months deteriorated in February, driven by renewed pessimism regarding future business and labor market conditions. 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 U.S. recession over the next 12 months picked back up after falling over the previous. three months.

Average 12-month inflation expectations ticked down further 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%. This aligns with continued slowing in consumer price inflation in government reports and fewer complaints about food and energy prices in our survey.

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