Consumer confidence falls for first time since November

Consumer confidence declined in February amid uncertainty about the economy and growing concerns about the labor market and the U.S. political environment. 

The Conference Board’s Consumer Confidence Index fell in February to 106.7, down from a revised 110.9 in January, marking the first decline after three consecutive months of gains. 

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, noted Dana Peterson, chief economist at The Conference Board. They are, however, more concerned about the labor market situation and the U.S. political environment.

"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,” said Peterson. “Confidence deteriorated for consumers under the age of 35 and those 55 and over, whereas it improved slightly for those aged 35 to 54.”

The Present Situation Index — based on consumers' assessment of current business and labor market conditions — fell back to 147.2 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 down from a revised 81.5 in January. 

Inflation

In other findings, average 12-month-inflation expectation 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.

Buying Plans

On a six-month basis, buying plans for autos, homes, and big-ticket appliances dipped slightly. The share of consumers planning a vacation over the next six months also declined. Expectations that  interest rates will rise over the year ahead picked up slightly to 42.7%, which may have influenced buying plans. Meanwhile, consumers remained upbeat about stock prices over the year ahead.

Specifics from the February report are below.

Present Situation

Consumers' assessment of current business conditions fell slightly in February.

• 21.2% of consumers said business conditions were "good," down slightly from 21.3% in January.
• 17.1% said business conditions were "bad," up from 15.3%.

Consumers' appraisal of the labor market was also less positive in February.

• 41.3% of consumers said jobs were "plentiful," down from 42.7% in January.
• 13.5% of consumers said jobs were "hard to get," up from 11.0%.

Expectations Six Months Hence

Consumers were, on balance, more pessimistic about the short-term business conditions outlook in February.

• 14.8% of consumers expect business conditions to improve, down from 16.7% in January.
• 15.5% expect business conditions to worsen, down from 16.0%.

Consumers' assessment of the short-term labor market outlook was more pessimistic in February.

• 14.7% of consumers expect more jobs to be available, down from 15.6% in January.
• 17.3% anticipate fewer jobs, up from 16.7%.

Consumers' assessment of their short-term income prospects was, on balance, more optimistic in February.

• 16.9% of consumers expect their incomes to increase, down from 17.1% in January.
• 11.3% expect their incomes to decrease, down from 12.5%.

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.