Consumer Confidence Shows Substantial Deterioration In February

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With consumers expressing concerns about business conditions and the job market, the Conference Board released a report on Tuesday showing a much bigger than expected drop in consumer confidence in the month of February.

The Conference Board said its consumer confidence index fell to 46.0 in February from an upwardly revised 56.5 in January. Economists had been expecting the index to edge down to 55.0 from the 55.9 originally reported for the previous month.

A notable deterioration in consumers' assessment of current conditions contributed to the bigger than expected drop in consumer confidence, with the present situation index falling to 19.4 in February from 25.2 in January.

Lynn Franco, Director of the Conference Board Consumer Research Center, said, "Concerns about current business conditions and the job market pushed the Present Situation Index down to its lowest level in 27 years."

The report showed that those claiming current conditions are "good" fell to 6.2 percent in February from 8.5 percent in January, while those claiming business conditions are "bad" rose to 46.3 percent from 44.7 percent.

Consumers were also more pessimistic about the labor market, with those saying jobs are "hard to get" rising to 47.7 percent in February from 46.5 percent in January, while those saying jobs are "plentiful" fell to 3.6 percent from 4.4 percent.

The Conference Board also said that the expectations index fell to 63.8 in February from 77.3 last month, as fewer consumers expect an improvement in business conditions and the job market over the next six months.

The percentage of consumers expecting an improvement in business conditions over the next six months fell to 16.7 percent in February from 20.7 percent in January, while those anticipating that conditions will worsen rose to 15.3 percent from 12.7 percent.

Additionally, the percentage of consumers expecting fewer jobs in the months ahead rose to 24.6 percent in February from 18.9 percent in January, and consumers expecting more jobs to become available fell to 13.4 percent from 15.8 percent.

Franco said, "Consumers also remain extremely pessimistic about their income prospects. This combination of earnings and job anxieties is likely to continue to curb spending."

The report showed that the percentage of consumers anticipating an increase in their incomes declined to 9.5 percent in February from 11.0 percent in the previous month.

James Knightley, an economist at ING Financial Markets, said, "Today's figure bodes badly for consumer spending, which had been improving of late. It also suggests that the better housing numbers are looking less sustainable and adds to downside risks for growth forecasts."

"Nonetheless, the size of the drop relative to the recent improvement in data flow across the economy does raise question marks," he added.

With consumers expressing concerns about business conditions and the job market, the Conference Board released a report on Tuesday showing a much bigger than expected drop in consumer confidence in the month of February. The Conference Board said its consumer confidence index fell to 46.0 in February from an upwardly revised 56.5 in January. Economists had been expecting the index to edge down to 55.0 from the 55.9 originally reported for the previous month. (Market News Provided by RTTNews)