by Plans for big-ticket purchases decline amid ongoing concerns about rising interest rates over the next 12 months
WASHINGTON — Consumer confidence fell in February, reversing three consecutive months of gains that indicated consumers were feeling better about their financial situation.
On Tuesday, the Conference Board reported that the confidence index fell to 106.7 in February, compared to 110.9 in January, which had been revised from a prior preliminary reading of 114.8.
The Present Situation Index, which reflects consumers’ assessment of current business and labor market conditions, also declined, to 147.2 this month from 154.9 in January, while the Expectations Index that reflects consumers’ short-term outlook for income, business and labor market conditions, declined to 79.8 from a revised 81.5 in January. The Conference Board notes that a reading below 80 can signal a looming recession.
Dana Peterson, chief economist at the Conference Board, said that the latest readings indicate a persistent uncertainty about the economy. Peterson also noted that the drop was broad-based, affecting all income groups between those earning $15,000 or more and those earning higher than $125,000. Confidence also fell for consumers under 35 and those 55 and over, while improving slightly for those between 35 and 54.
“February’s write-in responses revealed that while overall inflation remained the main preoccupation of consumers, they are now a little bit less concerned about food and gas prices, which have eased in recent months,” Peterson noted. “But they are more concerned about the labor market situation and the U.S. political environment.”
Average 12-month inflation expectations were 5.2% in February, after peaking at 7.9% in mid-2022. The February reading is also the lowest level since March 2020, when it was 4.5%. “This aligns with continued slowing in consumer price inflation in government reports and fewer complaints about food and energy prices in our survey,” the Consumer Confidence Board said.
Still, the latest consumer survey has implications for furniture buying in the months ahead as buying plans for autos, homes and big-ticket purchases such as appliances and furniture dropped slightly, although the share of consumers planning a vacation over the next six months also declined. Plans for big-ticket purchases have declined amid consumer expectations that interest rates will increase in the next 12 months. On a positive note, consumers are feeling positive about stock prices in the year ahead.
The survey had the following insights relating to how consumers feel about business conditions and the overall labor market:
+ 21.2% said that business conditions were good, down slightly from 21.3% in January
+ 17.1% said business conditions were bad, up from 15.3% in January
+ 41.3% of consumers said jobs were plentiful, down from 42.7% in January
+ 13.5% of consumers said jobs were hard to get, up from 11% in January
Of consumer expectations six months from now, the survey indicated that consumers were generally more pessimistic regarding the outlook for short-term business conditions. Key takeaways in the survey include:
+ 14.8% of consumers expect business conditions to improve, down from 16.7% in January
+ 15.5% of consumers expect business conditions to worsen, down from 16%
+ 14.7% of consumers expect more jobs to be available, down from 15.6% in January
+ 17.3% of those surveyed anticipate fewer jobs, up from 16.7% in January
+ 16.9% of consumers expect their incomes to increase, down from 17.1% in January
+ 11.3% expect their incomes to decrease, down from 12.5% in January
