Consumer Confidence Hits 15-Year High

The Conference Board, New York, said consumer confidence increased in February to its highest level since July 2001.

The Consumer Confidence Index, which had declined in January, increased in February to 114.8 up from 111.6. The Present Situation Index rose from 130.0 to 133.4; the Expectations Index increased from 99.3 last month to 102.4.

“Consumers rated current business and labor market conditions more favorably this month than in January,” said Lynn Franco, Director of Economic Indicators with The Conference Board. “Expectations improved regarding the short-term outlook for business, and to a lesser degree jobs and income prospects. Overall, consumers expect the economy to continue expanding in the months ahead.”

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., noted the index has risen 14 points since October and is up by nearly 21 points over the past year.

“All the attention focused on tax cuts, regulation reform and bringing jobs back to the United States appears to be having an impact on expectations for future economic conditions,” Vitner said. “The recent improvement in consumer confidence is consistent with stronger economic growth.”

The report said consumers’ assessment of current conditions held relatively steady in February. Those saying business conditions are “good” declined slightly from 29.0 percent to 28.7 percent, while those saying business conditions are “bad” also decreased, from 15.9 percent to 13.2 percent. Consumers’ assessment of the labor market was also mixed. Those stating jobs are “plentiful” declined from 27.1 percent to 26.2 percent, while those claiming jobs are “hard to get” also decreased, from 21.1 percent to 20.3 percent.

Consumers were more optimistic about the short-term outlook in February. The percentage of consumers expecting business conditions to improve over the next six months increased from 22.9 percent to 24.0 percent, however those expecting business conditions to worsen also rose slightly from 10.8 percent to 11.1 percent.

Consumers’ outlook for the labor market was also moderately more upbeat. The proportion expecting more jobs in the months ahead increased from 19.7 percent to 20.4 percent, while those anticipating fewer jobs declined from 14.4 percent to 13.6 percent. The percentage of consumers expecting their incomes to increase rose marginally from 18.1 percent to 18.3 percent, while the proportion expecting a decrease declined from 9.4 percent to 8.2 percent.