Consumer confidence takes small dip in February

Consumer confidence in February fell for the second consecutive month as consumers remained somewhat pessimistic about the economic outlook for the coming months.

The Conference Board’s monthly Consumer Confidence Index fell to 110.5 (1985=100) in February, down from 111.1 in January. The Present Situation Index — based on consumers’ assessment of current business and labor market conditions— improved to 145.1 from 144.5 last month. But the Expectations Index —based on consumers’ short-term outlook for income, business, and labor market conditions—declined to 87.5 from 88.8. 

“The Present Situation Index improved a touch, suggesting the economy continued to expand in Q1, but did not gain momentum,” said Lynn Franco, senior director of economic indicators, The Conference Board. “Expectations about short-term growth prospects weakened further, pointing to a likely moderation in growth over the first half of 2022.”

In addition, the proportion of consumers planning to purchase homes, automobiles, major appliances, and vacations during the next six months all fell.

Concerns about inflation rose again in February, after posting back-to-back declines. Despite this reversal, consumers remain relatively confident about short-term growth prospects, Franco noted.

“While they do not expect the economy to pick up steam in the near future, they also do not foresee conditions worsening,” she added. “Nevertheless, confidence and consumer spending will continue to face headwinds from rising prices in the coming months.”

Here are additional highlights from the Conference Board’s monthly Consumer Confidence Index for February.

• Consumers’ appraisal of current business conditions was mixed in February.

• 18.7% of consumers said business conditions were “good,” down from 20.0%.
• However, 24.7% of consumers said business
• conditions were “bad,” down from 27.4%.

Consumers’ assessment of the labor market was also mixed.

• 53.8% of consumers said jobs were “plentiful,” down from 55.0% but still a historically strong reading.
• However, 11.8% of consumers said jobs are “hard to get,” down from 12.0%.

Expectations Six Months Hence
Consumers’ optimism about the short-term business conditions outlook eased in February.

• 23.4% of consumers expect business conditions will improve, slightly down from 23.6%.
• However, 18.1% expect business conditions to worsen, down from 19.7%.

Consumers were also less optimistic about the short-term labor market outlook.

• 21.3% of consumers expect more jobs to be available in the months ahead, down from 22.1%.
• 17.9% anticipate fewer jobs, up from 16.6%.

Consumers were less positive about their short-term financial prospects.

• 15.7% of consumers expect their incomes to increase, down from 16.2%.
• 12.1% expect their incomes will decrease, unchanged from last month