Consumer confidence hits three-year high, Conference Board reports
Turmoil is spreading through the Middle East, the federal budget deficit is soaring and housing prices in much of the country are falling, but consumers still feel as though things are better than they have been in three years, according to one closely watched measure.
The Consumer Confidence Index from the Conference Board jumped in February to its highest point since February 2008, in the early days of the deep recession and before the financial crisis hit, the group announced Tuesday.
The moderate increase reflects growing optimism about the economy's short-term outlook, said Lynn Franco, director of the Conference Board Consumer Research Center. But she cautioned that assessment in the monthly survey was still "rather weak."
The index measures the perception of consumers about current business and employment conditions and their expectations for the next six months. February's 70.4 rating, up from 64.8% in January, still is well below the reading of 90 that indicates a healthy economy. But the new rating is a major improvement from the record-low of 25.3 it hit in February 2009.
"Looking ahead, consumers are more positive about the economy and their income prospects, but feel somewhat mixed about employment conditions,” she said.
The percentage of consumers who described business conditions as "good" increased to 12.4% from 11.3% in January, and those expecting their income to increase rose to 17.3% from 15.3%. But consumers had mixed views on the major issue facing the economy -- jobs.
The percentage of consumers expecting more jobs in the coming months dropped to 19.8% in February from 20.8% last month, although those expecting fewer jobs also decreased, to 15.4% from 21.2%.
Chris G. Christopher, senior principal economist at IHS Global Insight, said Tuesday's report was good news.
"We expect consumer confidence and spending to keep improving in 2011 due to a rising stock market, an improving job market, and increased household income," he said. "However, rising gasoline and food prices, turmoil in the Middle East and a poor housing market are putting a damper on things and keeping consumer confidence at relatively depressed levels."
-- Jim Puzzanghera
Photo: A consumer shopping for a big-screen TV in Raleigh, N.C. Credit: Bloomberg.