Consumer confidence index declines in February

The Conference Board Consumer Confidence Index, which had increased in January, declined in February. The Index now stands at 101.7 (1985=100), down from 106.8 in January. The Present Situation Index rose to 129.3 from 128.8. The Expectations Index, however, fell to 83.3 from 92.1 last month.

“The Present Situation Index continues to hold steady at a four-and-a-half year high (August 2001, 144.5) suggesting that, at least for now, the start of 2006 will be better than the end of 2005,” says Lynn Franco, director of The Conference Board Consumer Research Center. “However, consumers are growing increasingly concerned about the short-term health of the economy and, in turn, about job prospects. The Expectations Index is now at its lowest level in three years (March 2003, 61.4), excluding the two months following Hurricane Katrina. If expectations continue to lose ground, the outlook for the remainder of 2006 could deteriorate.”

Consumers’ appraisal of overall current conditions held steady in February. Those claiming conditions are “good” edged up to 26.2 percent from 25.9 percent. Those claiming conditions are “bad” edged down to 15.5 percent from 15.9 percent. Labor market conditions, however, were mixed. Consumers saying jobs are “plentiful” increased slightly to 27.3 percent from 27 percent, while those claiming jobs are “hard to get” moved up to 20.7 percent from 20.3 percent.

Consumers’ outlook for the next six months was much bleaker in February than in January. Those expecting business conditions to worsen increased to 11.1 percent from 10.5 percent, while consumers expecting business conditions to improve declined to 16.0 percent from 17.9 percent.

The outlook for the labor market was also less favorable. Consumers expecting fewer jobs to become available in the coming months increased to 20 percent from 15.2 percent in January, while those expecting more jobs declined to 13.4 percent from 13.6 percent. The proportion of consumers anticipating their incomes to increase in the months ahead eased to 18.6 percent from 19.9 percent last month.

The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS. The cutoff date for February’s preliminary results was Feb. 21.

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