Consumer confidence declines in February amid signs of spending pullback

Consumers are worried about what the future will bring.

Consumer confidence fell for the second straight month in February, according to The Conference Board. The Index declined to 102.9, down from 106.0 in January (a downward revision).

“The decrease reflected large drops in confidence for households aged 35 to 54 and for households earning $35,000 or more," said Ataman Ozyildirim, senior director, economics at The Conference Board. 

While consumers' view of current business conditions worsened in February, the Present Situation Index (based on consumers' assessment of current business and labor market condition) still ticked up slightly — rising to 152.8 from 151.1 last month — based on a more favorable view of the availability of jobs.

But consumers grew more pessimistic when looking ahead.  The Expectations Index — based on consumers' short-term outlook for income, business, and labor market conditions — fell further to 69.7, the lowest reading since July 2022 and down from 76.0 in January.

“Expectations for where jobs, incomes, and business conditions are headed over the next six months all fell sharply in February,” said Ozyildirim.

The Expectations Index has now fallen well below 80 — the level which often signals a recession within the next year, noted The Conference Board. It has been below this level for 11 of the last 12 months.

"And, while 12-month inflation expectations improved—falling to 6.3 percent from 6.7 percent last month—consumers may be showing early signs of pulling back spending in the face of high prices and rising interest rates,” said Ozyildirim. “Fewer consumers are planning to purchase homes or autos and they also appear to be scaling back plans to buy major appliances. Vacation intentions also declined in February."

Specifics from the February report are below.

• Present Situation 
Consumers' assessment of current business conditions worsened in February:

• 17.8% of consumers said business conditions were "good," down from 19.9%; and
• 17.7% said business conditions were "bad," down from 19.0%.

Consumers' appraisal of the labor market was more favorable:

• 52.0% of consumers said jobs were "plentiful," up from 48.1%; and
• 10.5% of consumers said jobs were "hard to get," down from 11.1%.

• Expectations Six Months Hence 
Consumers became more pessimistic about the short-term business conditions outlook in February:

• 14.2% of consumers expect business conditions to improve, down from 18.4%; and
• Meanwhile, 21.9% expect business conditions to worsen, down from 22.6%.

Consumers were less upbeat about the short-term labor market outlook:

• 14.5% of consumers expect more jobs to be available, down from 17.7%; and
• Yet, 20.3% anticipate fewer jobs, down from 21.4%.

Consumers' short-term income prospects became considerably less upbeat:

• 13.4% of consumers expect their incomes to increase, down from 17.4% last month; and
• 11.6% expect their incomes will decrease, down from 13.4% last month.

The monthly Consumer Confidence Survey, based on an online sample, is conducted for The Conference Board by Toluna, a technology company that delivers real-time consumer insights and market research through its innovative technology, expertise, and panel of over 36 million consumers.