If consumer spending drives the economy, a rebound in confidence reflected in the Feb. and Jan. reports suggests a slow emergence from the darkest days of the pandemic. Consumers’ attitudes about their current finances rose for the first time in three months.
BOSTON – The Conference Board Consumer Confidence Index reflects a growing optimism among Americans. The index improved again in February after increasing in January.
The Index now stands at 91.3, up from 88.9 in January.
The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – climbed from 85.5 to 92.0. However, the Expectations Index – based on consumers’ short-term future outlook for income, business and labor market conditions – fell marginally, from 91.2 last month to 90.8 in February.
“After three months of consecutive declines in the Present Situation Index, consumers’ assessment of current conditions improved in February,” says Lynn Franco, senior director of economic indicators at The Conference Board.
“This course reversal suggests economic growth has not slowed further,” Franco adds. “While the Expectations Index fell marginally in February, consumers remain cautiously optimistic, on the whole, about the outlook for the coming months. Notably, vacation intentions – particularly plans to travel outside the U.S. and via air – saw an uptick this month, and are poised to improve further as vaccination efforts expand.”
Current conditions: Consumers’ assessment of current conditions improved in February. The percentage of consumers claiming business conditions are “good” increased from 15.8% to 16.5%, while the proportion claiming business conditions are “bad” fell from 42.4% to 39.9%.
Consumers’ assessment of the labor market also improved. The percentage of consumers saying jobs are “plentiful” increased from 20.0% to 21.9%, while those claiming jobs are “hard to get” declined from 22.5% to 21.2%.
Future expectations: Consumers, however, were marginally less optimistic about the short-term outlook in February. The percentage of consumers expecting business conditions to improve over the next six months fell from 34.1% to 31.0%, although the proportion expecting business conditions to worsen also declined, from 19.0% to 17.7%.
Consumers’ outlook regarding the job market was also mixed. The proportion expecting more jobs in the months ahead decreased from 30.4% to 26.1%, but the proportion anticipating fewer jobs also declined, from 22.1% to 20.6%.
And in what appears to be a trend, attitudes regarding short-term income prospects were mixed too – 15.2% of consumers expect their incomes to increase in the next six months, down slightly from 15.8% in January. Conversely, 13.2% expect their incomes to decrease, down from 15.5% last month.
The monthly Consumer Confidence Survey is based on a probability-design random sample and conducted for The Conference Board by Nielsen. The cutoff date for the preliminary results was Feb. 11.
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