The Conference Board said that consumer sentiment fell sharply in February. The Consumer Confidence Index declined from a revised 103.8 in January to 96.4 in February. The January figure had been originally reported to be 102.9, and it was the highest point for this measure since August 2007. The decrease in attitudes in this report in February mirrored similar drops in perceptions in the most recent University of Michigan and National Federation of Independent Business surveys. Still, the depth of the pullback in February was larger than expected, and it suggests that the American public remains more anxious than desired.
Those taking the survey were more pessimistic in their responses about the future. The expectations component fell from 97.0 in January to 87.2 in February, serving as a drag on the overall headline figure. These data have been highly volatile over the past few months, ranging from a low of 86.4 in September to January’s high. February’s decrease can be further seen in the reductions of confidence regarding future income. The percentage of respondents expecting their incomes to increase dropped from 19.5 percent to 15.1, with those anticipating income declines rising from 10.8 percent to 12.0 percent. Likewise, the percentage of individuals stating that jobs were “hard to get” rose from 24.6 percent to 26.2 percent.
The more-downbeat assessment of the labor market contrasts with recent improvements. It is important to note that January’s increase was a significant one, with February’s easing bringing these data back to a more-consistent trend line. As such, the public’s attitudes about the economy have largely risen over a longer time horizon, with those taking the survey more upbeat today than one year ago. Nonetheless, the outlook measure has been up and down over the past six months. This perhaps helps to explain why consumers remain more cautious than we might desire.
Chad Moutray is the chief economist, National Association of Manufacturers.
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