Consumer Outlook Sours in February

An uncertain outlook brought consumer confidence down in February, erasing much of January’s recovery.

The Conference Board’s Consumer Confidence Index fell from a revised 79.4 last month to 78.1 in the most recent release. The individual components making up the index were mixed, with the measure of current conditions rising nearly four points to 81.7 and the gauge of consumer expectations falling more than five points to 75.7.

“While expectations have fluctuated over recent months, current conditions have continued to trend upward and the Present Situation Index is now at its highest level in almost six years,” said Lynn Franco, director of economic indicators at the Conference Board. “This suggests that consumers believe the economy has improved, but they do not foresee it gaining considerable momentum in the months ahead.”

Asked about their thoughts on the current economic situation, 21.5 percent of consumers said business conditions are “good” (up from 20.8 percent), while 22.6 percent said conditions are “bad” (from 23.4 percent). Meanwhile, 13.9 percent said jobs are “plentiful,” up slightly from the last index—though nearly a third still say jobs are hard to find.

For the next six months, more consumers are expecting business conditions to worsen (up to 13.3 percent from 12.2 percent in January’s survey), and fewer expect improvements in labor or in their personal incomes.

While consumers expressed a less-than-rosy outlook, economist Amna Asaf from research firm Capital Economics dismissed the “trivial drop” in confidence as “either weather-related or a delayed reaction to the recent dip in equity prices, since all of the other indicators of confidence have continued to show improvement.”

“Overall, we aren’t too concerned about the tiny decline in confidence, as the improving fundamentals suggest that a rebound is just around the corner,” Asaf said.