Consumer Confidence fell in January primarily due to on-going fears over consumer expectations for the next six months including worries over jobs and income, according to a report from the Conference Board.
The report indicated consumer confidence fell to 78.1 in February from 79.4 in January. The main driver behind the drop was a decline in the consumer expectations segment of the report, which fell to 75.7 from 80.8. Consumer expectations have fluctuated over the last several months, but generally have been trending upward, said Lynn Franco, Director of Economic Indicators at The Conference Board.
"Consumer confidence declined moderately in February, on concern over the short-term outlook for business conditions, jobs, and earnings," Franco said.
However, when asked about business conditions 21.5 percent rated them as "good" up from 20.8 percent in January. This is the fourth consecutive month that those surveyed believed conditions would improve. Those labeling conditions as bad declined to 22.6 percent from 23.4 percent. Consumer thoughts on the job market also improved. Those believing jobs were "plentiful" increased to 13.9 percent from 12.5 percent, while those saying jobs are still hard to get fell slightly to 32.5 percent from 32.7 percent.
Though confidence faltered in February, it should bounce back in March, said Ian Shepherdson, chief economist at Pantheon Macroeconomics. "We expect so, but if we're wrong, the signal for spring consumption will be discouraging," according to the LA Times.
Bloomberg surveyed 82 economists prior to the report by the Conference Board and these individuals expected consumer confidence to fall between 75 and 86.
Consumers' expectations, which had been improving over the past two months, retreated in February. The percentage of consumers expecting business conditions to improve over the next six months decreased to 16.3 percent from 17.0 percent, while those anticipating business conditions to worsen increased to 13.3 percent from 12.2 percent. Consumers' outlook for the labor market was also more pessimistic. Those expecting more jobs in the months ahead declined to 13.3 percent from 15.1 percent, while those anticipating fewer jobs increased to 20.6 percent from 19.0 percent. The proportion of consumers expecting their incomes to increase declined from 16.6 percent to 15.4 percent, but those anticipating a decrease in their incomes also declined, from 13.9 percent to 13.1 percent.
The monthly Consumer Confidence Survey, based on a probability-design random sample, is conducted for the Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch. The cutoff date for the preliminary results was February 13.
