Consumer Confidence Index Plummets in February

Consumer Confidence Index chart for February 2009The Conference Board Consumer Confidence Index, which had decreased moderately in January, declined in February, reaching yet another all-time low. The Index now stands at 25 (1985=100), down from 37.4 in January. The Present Situation Index declined to 21.2 from 29.7 last month. The Expectations Index decreased to 27.5 from 42.5 in January.

“The Consumer Confidence Index, which was relatively flat in January, reached yet another all-time low in February (Index began in 1967),” said Lynn Franco, director of The Conference Board Consumer Research Center. “The decline in the Present Situation Index, driven by worsening business conditions and a rapidly deteriorating job market, suggests that overall economic conditions have weakened even further this quarter. Looking ahead, increasing concerns about business conditions, employment, and earnings have further sapped confidence and driven expectations to their lowest level ever. In addition, inflation expectations, which had been easing over the past several months, have moderately picked up. All in all, not only do consumers feel overall economic conditions have grown more dire, but just as disconcerting, they anticipate no improvement in conditions over the next six months.”

Consumers’ appraisal of overall current conditions, which was already bleak, worsened further, the Conference Board said. Those claiming business conditions are “bad” rose to 51.1 percent from 47.9 percent, while those saying business conditions are “good” edged up to 6.8 percent from 6.5 percent last month. Consumers’ assessment of the labor market turned considerably more pessimistic in February. Those saying jobs are “hard to get” increased to 47.8 percent from 41.1 percent in January, while those stating jobs are “plentiful” fell to 4.4 percent from 7.1 percent.

Consumers’ short-term outlook turned significantly more negative this month. Consumers anticipating business conditions will worsen over the next six months increased to 40.5 percent from 31.1 percent, while those expecting conditions to improve declined to 8.7 percent from 12.8 percent in January.

The employment outlook was also much grimmer. The percentage of consumers expecting fewer jobs in the months ahead increased to 47.3 percent from 36.9 percent, while those expecting more jobs declined to 7.1 percent from 9.1 percent. The proportion of consumers expecting an increase in their incomes declined to 7.6 percent from 10.3 percent.

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 custom research company TNS. The cutoff date for February’s preliminary results was Feb. 18.