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Economy in Brief

U.S. Consumer Confidence Rebounds
by Gerald D. Cohen  February 26, 2019

The Conference Board Consumer Confidence Index jumped a great-than-expected 8.0% to 131.4 in February (1.1% year-on-year) reversing January's decline. Still, confidence has fallen 6.5 points from the cycle high touched in October 2018. The Action Economics Forecast Survey expected a reading of 124.8. During the past ten years, there has been a 67% correlation between the level of consumer confidence and the year-on-year change in monthly real consumer spending.

As per January, the expectation component drove the shift in confidence, jumping 15.7% (-5.3% y/y) in February. Meanwhile, views of the present situation continue to improve, up 1.9% (7.6% y/y) to a cycle high 173.5. The labor market differential, representing the difference between respondents indicating jobs are plentiful and those saying jobs are hard to get, also rose to a cycle high 34.3. This series has a 97% correlation with the unemployment rate over the last ten years.

The expected inflation rate in twelve months declined to 4.3%, the lowest reading since 2004 and down from the 5.0% registered last July. The share of respondents planning on buying a new home in six-months decreased to 5.5% in February from 7.2%, this is the low end of the range we've seen for the last three years. Meanwhile, those planning on buying a major appliance slid to 47.2%, the lowest level since early 2015. In December 2017, this indicator hit a cycle high 59.3%

Confidence rose for all demographic groups. While confidence for those under 35 is close to its November cycle high, confidence for the other age groups remains below the previous peak,

The Consumer Confidence data are available in Haver's CBDB database. The total indexes, which are indexed to 1985=100, appear in USECON, and the market expectations are in AS1REPNA.

The Semiannual Monetary Policy Report to the Congress from Fed Chairman Jerome H. Powell is available here.

Conference Board (SA, 1985=100) Feb Jan Dec Feb Y/Y % 2018 2017 2016
Consumer Confidence Index 131.4 121.7 126.6 1.1 130.1 120.5 99.8
   Present Situation 173.5 170.2 169.9 7.6 164.8 144.8 120.3
   Expectations 103.4 89.4 97.7 -5.3 107.0 104.3 86.1
Consumer Confidence By Age Group
   Under 35 Years 141.0 126.9 129.5 3.4 133.7 130.2 122.4
   Aged 35-54 Years 133.5 123.4 135.9 0.2 132.2 123.5 106.2
   Over 55 Years 127.0 117.4 117.2 0.9 126.3 112.9 84.6
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