U.S. Consumer Confidence Fell Sharply in February
Real Estate In-Depth | March 1, 2023
NEW YORK—The Conference Board Consumer Confidence Index decreased in February for the second consecutive month. The Index now stands at 102.9 (1985=100), down from 106.0 in January (a downward revision), The Conference Board announced on Feb. 28.
The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—increased to 152.8 (1985=100) from 151.1 last month. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—fell further to 69.7 (1985=100) from a downwardly revised 76.0 in January. Notably, the Expectations Index has now fallen well below 80—the level which often signals a recession within the next year. It has been below this level for 11 of the last 12 months.
“Consumer confidence declined again in February. The decrease reflected large drops in confidence for households aged 35 to 54 and for households earning $35,000 or more,” said Ataman Ozyildirim, Senior Director, Economics at The Conference Board.
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%—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, Ozyildirim said.
“And, while 12-month inflation expectations improved—falling to 6.3% from 6.7% last month—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 added.
Chris Rupkey at FwdBonds told CNN in reaction to the Consumer Confidence Index report, “If consumers drive the economy, the outlook for 2023 is bleak, as the consumers expect that the worst is yet to come. Coming on the heels of a gigantic 517,000 new payroll jobs report in January, current conditions especially in the labor market look great, but the future path of the economy is very much in doubt.”
Consumers’ assessment of current business conditions worsened in February.
• 17.8% of consumers said business conditions were “good,” down from 19.9%.
• 17.7% said business conditions were “bad,” down from 19.0%.
Consumers’ appraisal of the labor market was more favorable.
• 52.0% of consumers said jobs were “plentiful,” up from 48.1%.
• 10.5% of consumers said jobs were “hard to get,” down from 11.1%.
Expectations Six Months Hence
Consumers became more pessimistic about the short-term business conditions outlook in February.
• 14.2% of consumers expect business conditions to improve, down from 18.4%.
• Meanwhile, 21.9% expect business conditions to worsen, down from 22.6%.
Consumers were less upbeat about the short-term labor market outlook.
• 14.5% of consumers expect more jobs to be available, down from 17.7%.
• Yet, 20.3% anticipate fewer jobs, down from 21.4%.
Consumers’ short-term income prospects became considerably less upbeat.
• 13.4% of consumers expect their incomes to increase, down from 17.4% last month.
• 11.6% expect their incomes will decrease, down from 13.4% last month.
The monthly Consumer Confidence Survey, based on an online sample, is conducted for The Conference Board by Toluna, a technology company that delivers real-time consumer insights and market research through its innovative technology, expertise, and panel of over 36 million consumers. The cutoff date for the preliminary results was Feb. 22.