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Economy in Brief

U.S. Consumer Confidence Weakens in February
by Tom Moeller  February 22, 2022

• Expectations fall sharply for second month; present situation reading improves again.

• Jobs are harder to find.

• Expectations for price inflation & interest rates rise.

The Conference Board Consumer Confidence Index eased 0.5% in February (+16.1% y/y) to 110.5 after falling to 111.1 in January, revised from 113.8. A larger February decline to 109.8 had been expected in the Action Economics Forecast Survey.

The Consumer Expectations index declined 1.5% in February (-8.3% y/y) to 87.5 following a 6.9% January decline to 88.8, revised from 90.8. The Present Situation index improved 0.4% this month (52.7% y/y) to 145.1 after easing 0.2% in January to 144.5, revised from 148.2.

The jobs gap, representing the difference between respondents indicating that jobs are plentiful and those saying jobs are hard to get, fell to 42.0% and added to the January decline to 43.0%. Calculated by Haver Analytics, this series has had a 69% correlation with the unemployment rate over the last ten years. The jobs plentiful measure fell this month to 53.8% of respondents from 55.0%in January. The jobs hard-to-get measure eased to 11.8% of respondents and has been fairly steady for a year. The jobs-not-so-plentiful reading rose to 34.4% of respondents but remained below last February's level of 55.2%.

Current business conditions were perceived as good by a lessened 18.7% of respondents in February, the least in three months. Expectations that business conditions would improve in six months slipped to 23.4% of respondents and remained well below the 2020 highs. More jobs were expected in six months by a lessened 21.3% of respondents, the least since September 2021. The percentage expecting rising income fell sharply in February to 15.7% of respondents, the least since January of last year.

The expected inflation rate in twelve months rose to 7.0% in February coming after declines in the prior two months. It remained up from a 4.4% low in January of 2020. Roughly two-thirds of respondents expected that interest rates would rise over the next twelve months, the most in three years. The share of respondents planning to buy a new home within six months held steady m/m at 0.8% and remained below a June 2020 high of 2.0%. Those planning to buy a major appliance fell sharply to 47.2% of respondents, a five-month low.

Confidence of individuals under 35 years improved modestly m/m and remained sharply higher y/y. Confidence amongst those between 35 & 54 rose moderately m/m and y/y. Confidence amongst individuals 55 and over has been falling steadily since June of 2021.

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

Conference Board (SA, 1985=100) Feb Jan Dec Feb'21 2021 2020 2019
Consumer Confidence Index 110.5 111.1 115.2 95.2 112.7 101.0 128.3
   Present Situation 145.1 144.5 144.8 95.0 135.4 109.8 169.8
   Expectations 87.5 88.8 95.4 95.4 97.6 95.2 100.6
Jobs Gap (%) 42.0 43.0 44.2 1.4 31.4 6.8 33.2
   Jobs Plentiful (%) 53.8 55.0 55.9 23.1 45.4 27.8 45.8
   Jobs Hard to Get (%) 11.8 12.0 11.7 21.7 14.0 21.0 12.6
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