Consumer confidence falls sharply in February
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Consumer confidence took a swan dive in February to its lowest point since April, according to a monthly poll released Tuesday.
The index plunged to 46 from January’s 56.5, following several months of boosts, according to the Conference Board. The economy is stable only when the reading surpasses 90.
The New York-based nonprofit said that consumers are in a generally sour mood, due partly to pessimism about job prospects and income worries. The anxiety would likely lead to curbed spending, the board said.
‘While other indicators are showing that the recession is over, to the consumer it still feels like we’re still mired in the recession,’ said Lynn Franco, director of the group’s Consumer Research Center in an interview. ‘This recovery has been driven more by business than by the consumer. The fact that we’re not adding jobs but are still shedding them is doing very little to comfort consumers.’
About 70% of economic activity in the country comes from consumer spending, making the confidence numbers a key element of economic health. A series of major storms on the East Coast earlier this month had little effect on the dour data, Franco said.
Fewer people see business conditions and employment improving in the near future, pushing the expectations index down to 63.8 from 77.3 in January.
The present situation index, which measures consumers’ feelings about the current environment, also tumbled. The drop to 19.4 from 25.2 hit the index’s lowest level since it reached 17.5 in February 1983.
The survey of 5,000 U.S. households is conducted for the Conference Board by research company TNS. The report found that just 6.2% of consumers think that current conditions are good, down from 8.5% in January. An increasing percentage of people find that the situation nowadays is bad and that jobs are difficult to land.
The outlook over the next six months is also disappointing, according to surveyed consumers. Fewer people in January expect incomes to increase or more jobs to become available, while 24.6% -- up from 18.9% -- believe the employment situation will worsen.
Fewer people expect stock prices to increase over the next year, Franco said.
Nearly 17% of consumers think that business conditions will improve, a decline from 20.7% in January. More than 15% are anticipating the opposite.
-- Tiffany Hsu
Graphic: The Conference Board
