Consumer confidence took a turn for the worse in February with a sharp rise in pessimism about economic conditions in the months ahead.
The Conference Board said its index of consumer sentiment fell to 102.9 in February from a downwardly revised January reading of 106.0, Economists had forecast an increase to 108.5 after the initial January reading of 107.1.
The measure of consumers’ assessment of current business and labor market conditions actually improved to 152.8 from 151.1 last month as a rising share who said jobs were plentiful offset a deteriorating view of current business conditions.
The measure of expectations for the year ahead fell sharply, plunging from a downwardly revised 76.0 in January to 69.7 in February.
Readings below 80 on the expectations barometer often signal a recession within the next year. Expectations have been below that level for 11 of the last 12 months.
“While consumers’ view of current business conditions worsened in February, the Present Situation Index still ticked up slightly based on a more favorable view of the availability of jobs. In fact, the proportion of consumers saying jobs are ‘plentiful’ climbed to 52.0 percent—back to levels seen in the spring of last year. However, the outlook appears considerably more pessimistic when looking ahead. Expectations for where jobs, incomes, and business conditions are headed over the next six months all fell sharply in February,” said Ataman Ozyildirim, senior director for economics at The Conference Board.
Expectations for inflation in the year ahead improved, with prices expected to rise by 6.3 percent over the next 12 months, down from 6.7 percent in January. Ozyildirim warned however, that “consumers may be showing early signs of pulling back spending in the face of high prices and rising interest rates.”
“Fewer consumers are planning to purchase homes or autos and they also appear to be scaling back plans to buy major appliances. Vacation intentions also declined in February,” he said.
Please let us know if you're having issues with commenting.