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Economy in Brief

U.S. Consumer Confidence Rebounds With Improved Expectations
by Tom Moeller  February 26, 2013

The Conference Board's Consumer Confidence Index for February rebounded to 69.6 and more than recovered the January decline. The gain outpaced Consensus forecasts for a rise to 60.5. During the last ten years, there has been a 47% correlation between the level of confidence and the three-month change in real PCE.

The expectations component jumped 23.2% to 73.8 and reversed its January drop. An improved 18.9% of respondents thought business conditions would be better in six months. Also, a somewhat higher 16.7% thought there would be more jobs while an improved 15.7% expected higher income. Consumers' reading of the present situation also improved, but to a lesser extent m/m. The present situations index rose to 63.3 but didn't recover all of the January decline. Confidence in the labor market rebounded, but the 10.5% who thought that jobs were plentiful remained below the November high. A low 37.0% thought that jobs were hard to get. On the optimistic side, a higher 18.1% of respondents asserted that business conditions were good, the most in five years.

Expectations for inflation in the next twelve months fell to 5.5%, its lowest level since July of last year. The percentage of people looking for higher stock prices surged to 36.4% this month, while the percent who are bearish dropped sharply. The percentage of respondents planning to buy a home within six months collapsed to 0.3%, its lowest since the recession.

Consumer confidence varied greatly by age group. Those under 35 years old were the most confident, but that confidence is moderating. Middle aged individuals were more confident this month but less so than younger individuals. Those over 55 years remained the least confident about the economy. 

 

Conference Board (SA, 1985=100) Feb Jan Dec Y/Y % 2012 2011 2010
Consumer Confidence Index 69.6 58.4 66.7 -2.8 67.1 58.1 54.5
  Present Situation 63.3 56.2 64.6 36.4 49.8 36.1 25.7
  Expectations 73.8 59.9 68.1 -16.5 78.6 72.8 73.7
Consumer Confidence By Age Group
  Under 35 Years 93.7 74.0 94.8 10.6 86.5 77.3 70.4
  Aged 35-54 Years 69.5 58.9 65.9 -2.5 68.5 59.8 55.1
  Over 55 Years 59.2 51.6 53.6 -10.0 56.6 47.3 47.4
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