Consumer Confidence Rises Slightly
The Conference Board, New York, said its Consumer Confidence Index rose for the second straight month in February, albeit slightly.
The Index now stands at 130.7, up from 130.4 in January. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, decreased from 173.9 to 165.1. However, the Expectations Index, based on consumers’ short-term outlook for income, business and labor market conditions, increased from 101.4 in January to 107.8 in February.
“Despite the decline in the Present Situation Index, consumers continue to view current conditions quite favorably,” said Lynn Franco, Senior Director of Economic Indicators. “Consumers’ short-term expectations improved, and when coupled with solid employment growth, should be enough to continue to support spending and economic growth in the near term.”
Tim Quinlan, Senior Economist with Wells Fargo Securities, Charlotte, N.C., said the rapid increase in coronavirus (COVID-19) cases has not yet materially shaken consumers.
“Consumer confidence rose to a six-month high, although last month’s initial reading was revised lower, taking some of the air out of the balloon,” Quinlan said. “That said, the COVID-19 impact mercifully has not yet been too pronounced.”
Quinlan noted in 2003, during the SARS breakout, confidence briefly cratered, “though whether that was attributable to the outbreak of disease or the war in Iraq is impossible to know. It is still early days, but so far confidence is holding up comparatively well. There is no getting away from the fact that COVID-19 is weighing on sentiment, but one thing that remains quite healthy is the U.S. jobs market, which continues to underpin confidence.”
The report said consumers’ assessment of current conditions was less favorable in February. Those claiming business conditions are “good” declined from 40.0 percent to 38.6 percent, while those claiming business conditions are “bad” increased, from 10.4 percent to 11.9 percent. Consumers’ assessment of the job market also moderated from last month. Those saying jobs are “plentiful” decreased from 47.2 percent to 44.6 percent, while those claiming jobs are “hard to get” increased from 11.9 percent to 14.8 percent.
Consumers were more optimistic about the short-term outlook. The percentage of consumers expecting business conditions will improve over the next six months increased from 18.4 percent to 20.4 percent, while those expecting business conditions will worsen declined, from 8.6 percent to 7.4 percent.
Consumers’ outlook for the labor market was mixed. The proportion expecting more jobs declined slightly from 16.5 percent to 16.2 percent, but those anticipating fewer jobs in the months ahead also decreased, from 12.9 percent to 11.1 percent. Regarding their short-term income prospects, the percentage of consumers expecting an increase rose from 21.6 percent to 22.0 percent, while the proportion expecting a decrease declined from 8.0 percent to 6.7 percent.