US Consumers Lose New Year Confidence

The Conference Board's Consumer Confidence Index, which had improved last month, weakened significantly in February from 96.4% to 87.3 (1985=100). The monthly survey is conducted for The Conference Board by NFO WorldGroup.

Two other main indicators also fell sharply, the Expectations Index to 96.8 from 107.8 and the Present Situation Index to 73.1 from 79.4.

The proportion claiming business conditions are 'good' fell to 19.3% from 21.9%, and the proportion claiming jobs are 'hard to get' rose by half a percent to 32.1%. Most people expect business conditions to stay about the same in the next six months but only 21.8% now expect them to improve, versus 27.6% last month and 8.7% now expect them to worsen, up from 6.7% in January.

Other measures are also down - only 18.7% are expecting more jobs to become available in the next six months (22.0% in January) while 18.1% now expect the jobs situation to worsen (15.0% in January). The proportion of consumers anticipating an increase in their incomes declined to 16.7% from 19.2%.

Lynn Franco, Director of The Conference Board's Consumer Research Center, says that consumers' new year optimism has quickly given way to caution: 'Consumers remain disheartened with current economic conditions, and at the core of their disenchantment is the labor market. While the current expansion has generated jobs over the past several months, the pace of creation remains too tepid to generate a sustainable turnaround in consumers' confidence'.

The monthly Survey is based on a representative sample of 5,000 US households. The cut-off date for February's preliminary results was the 17th.

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.

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