U.S. Consumer Confidence Disappoints in February

The Conference Board's Index of Consumer Confidence declined 3.8% (+3.2% y/y) during February to 106.7. A reading of 114.9 had been expected in the Action Economics Forecast Survey. The decline came after a 2.7% rise in January to 110.9, revised from 114.8, and an unrevised 6.9% December gain. The latest level remains well below the high of 137.9 in October 2018 and below the June 2021 high of 128.9.

The Present Situations Index fell 5.0% (-3.8% y/y) to 147.2 and reversed January’s 5.2% rise to 154.9, revised from 161.3. The Expectations Index fell 2.1% (+13.4% y/y) to 79.8 after easing 0.5% in January to 81.5, revised from 83.8.

A steady 21.2% of respondents characterized current business conditions as good in February, up from a low of 18.3% four months earlier, but remained below a high of 23.4% in June. Recent figures are above their low of 16.3% in July of 2022. Labor market readings deteriorated this month. The jobs gap, representing the difference between respondents indicating that jobs are plentiful and those saying jobs are hard to get, fell to 27.8% from 31.7% in January. The reading remained below the March 2022 high of 47.1%. Calculated by Haver Analytics, this series has a 64% correlation with the unemployment rate over the last ten years. The jobs plentiful measure fell to 41.3% from 42.7% and remained below the March 2022 high of 56.7%. The jobs hard-to-get measure of 13.5% compared to 11.0% in January. The jobs not-so-plentiful reading fell to 45.2% but remained well above its 30.5% low in September 2021.

Consumers assessment of future business conditions deteriorated as a lower 14.8% of respondents felt that conditions would be better in six months. This remained up, however, from a low of 13.2% in May of 2023, but remained below a high of 20.9% in December 2022. A lessened 14.7% of respondents felt there would be more jobs in six months, down from a high of 41.2% in April 2020. This remains below a recent high of 20.0% in December of 2022. A lessened 16.9% expected income to increase in six months, down from 18.3% in December and below a high of 19.6% in October of 2022.

The expected inflation rate in twelve months of 5.2% compared to 5.3% in January. It remained below the 7.9% high in June 2022, but above the 4.4% low in January 2020.

A slightly higher 42.7% of respondents felt that interest rates would be higher in twelve months, down from 61.3% in February of last year. A lessened 23.3% thought they would be lower. A higher 42.2% of respondents believed that stock prices would be higher in twelve months, compared to 39.3% in January. A lessened 23.8% thought stock prices would be lower in twelve months versus a high of 44.7% in July of 2022. The share of respondents planning to buy a home within six months was little changed at 4.7% and remained below the October 2022 high of 7.4%. The percentage of respondents planning to buy a major appliance jumped m/m to 46.5%, but that remained below a high of 52.4% in October 2022.

The Consumer Confidence data are available in Haver's CBDB database. The total indexes, which are indexed to 1985=100, appear in USECON, and market expectations are in AS1REPNA.