Spring is here and it looks like people are feeling a little less sunshine-y about the economy. A survey by The Conference Board found that consumer confidence took a dip in February, after three months of feeling good.
Here’s the thing: people are worried about the whole inflation situation, even though food and gas aren’t quite the monsters they were. But now they’re fretting more about jobs and the upcoming elections.
The survey also found folks are putting off big purchases like cars and houses, maybe because they’re not sure what interest rates will do. There is a bright spot though, people are still feeling optimistic about the stock market.
All in all, it seems like people are feeling a bit cautious about the next few months. Not a full-on panic, but definitely a “wait and see” kind of vibe.
The Conference Board Consumer Confidence Index® fell in February to 106.7 (1985=100), down from a revised 110.9 in January. February’s decline in the Index occurred after three consecutive months of gains. However, as January was revised downward from the preliminary reading of 114.8, the data now suggest that there was not a material breakout to the upside in confidence at the start of 2024.
The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—fell back to 147.2 (1985=100) in February from 154.9 in January. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—slipped to 79.8 (1985=100), down from a revised 81.5 in January. An Expectations Index reading below 80 often signals recession ahead.
“The decline in consumer confidence in February interrupted a three-month rise, reflecting persistent uncertainty about the US economy,” said Dana Peterson, Chief Economist at The Conference Board. “The drop in confidence was broad-based, affecting all income groups except households earning less than $15,000 and those earning more than $125,000. Confidence deteriorated for consumers under the age of 35 and those 55 and over, whereas it improved slightly for those aged 35 to 54.”
Peterson added: “February’s write-in responses revealed that while overall inflation remained the main preoccupation of consumers, they are now a bit less concerned about food and gas prices, which have eased in recent months. But they are more concerned about the labor market situation and the US political environment.”
Assessments of the present situation weakened in February, as consumers’ views of both business conditions and the employment situation became less favorable. Furthermore, consumers’ assessments of their personal financial situation (a measure not included in calculating the Present Situation Index) also weakened.
Consumer expectations for the next six months deteriorated in February, driven by renewed pessimism regarding future business and labor market conditions. Consumers were also a bit less optimistic about their family financial situation over the next six months (a measure not included in calculating the Expectations Index). Additionally, consumers’ Perceived Likelihood of a US Recession over the Next 12 Months picked back up after falling over the previous three months.
On a six-month basis, buying plans for autos, homes, and big-ticket appliances dipped slightly. The share of consumers planning a vacation over the next six months also declined. Expectations that interest rates will rise over the year ahead picked up slightly to 42.7 percent, which may have influenced buying plans. Meanwhile, consumers remained upbeat about stock prices over the year ahead.
Average 12-month inflation expectations ticked down further to 5.2 percent in February. After peaking at 7.9 percent in mid-2022, expected inflation has now fallen to its lowest level since March 2020, when it stood at 4.5 percent. This aligns with continued slowing in consumer price inflation in government reports and fewer complaints about food and energy prices in our survey.
Present Situation
Consumers’ assessment of current business conditions fell slightly in February.
- 21.2% of consumers said business conditions were “good,” down slightly from 21.3% in January.
- 17.1% said business conditions were “bad,” up from 15.3%.
Consumers’ appraisal of the labor market was also less positive in February.
- 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 11.0%.
Expectations Six Months Hence
Consumers were, on balance, more pessimistic about the short-term business conditions outlook in February.
- 14.8% of consumers expect business conditions to improve, down from 16.7% in January.
- 15.5% expect business conditions to worsen, down from 16.0%.
Consumers’ assessment of the short-term labor market outlook was more pessimistic in February.
- 14.7% of consumers expect more jobs to be available, down from 15.6% in January.
- 17.3% anticipate fewer jobs, up from 16.7%.
Consumers’ assessment of their short-term income prospects was, on balance, more optimistic in February.
- 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%.
Assessment of Family Finances and Recession Risk
- Consumers’ assessment of their Family’s Current Financial Situation was less positive in February.
- Consumers were a bit less optimistic about their Family’s Financial Situation going forward.
- Consumers’ Perceived Likelihood of a US Recession over the Next 12 Months ticked up in February.
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 February 19.
