Global| Feb 23 2016U.S. Consumer Confidence Declines Sharply; Expectations Deteriorate
by:Tom Moeller
|in:Economy in Brief
Summary
The Conference Board's Consumer Confidence Index during February declined 5.7% to 92.2 (-6.7% y/y) from 97.8 in January, revised from 98.1. It was the lowest level of confidence since July. The figure disappointed Consensus forecasts [...]
The Conference Board's Consumer Confidence Index during February declined 5.7% to 92.2 (-6.7% y/y) from 97.8 in January, revised from 98.1. It was the lowest level of confidence since July. The figure disappointed Consensus forecasts for a reading of 97.5, according to the Action Economics Forecast Survey. During the last ten years there, has been a 70% correlation between the level of confidence and the y/y change in real consumer spending.
A 7.5% drop (-12.3% y/y) in the expectations reading to 78.9 led the decline as it fell to the lowest level since February 2014. The present situations figure followed with a 3.9% drop (unchanged y/y) to 112.1, the lowest level in three months.
Consumers perception that business conditions were bad rose to the highest point since November 2014. The appraisal that jobs were hard to get nudged higher to 24.2% of respondents, but has been trending sideways for six months. Looking forward, a lessened 14.6% of respondents thought that business conditions would improve, down from 20.8% in August 2014. Expectations that conditions would worsen has been trending upward. A greatly lessened 12.2% of respondents thought there would be more jobs, while a higher 17.2% expected fewer jobs.
Expectations for the inflation rate fell to 4.7%, the lowest level since early 2007. Higher interest rates were expected by a sharply reduced 61.0% of respondents.
Plans to buy a new home deteriorated to the lowest level in six months, and major appliance buying plans plummeted. Intentions to buy a new car improved, however, to the highest point since September.
By age group, confidence amongst respondents under age 35 deteriorated sharply to the weakest point since July. Confidence amongst those aged 35-54 years eased to a three-month low, and confidence amongst respondents over age 55 similarly fell slightly. Both of these latter figures were down sharply, however, from last year's highs.
The Consumer Confidence data is available in Haver's CBDB database. The total indexes appear in USECON, and the market expectations are in AS1REPNA.
| Conference Board (SA, 1985=100) | Feb | Jan | Dec | Y/Y % | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|---|---|
| Consumer Confidence Index | 92.2 | 97.8 | 96.3 | -6.7 | 98.0 | 86.9 | 73.2 |
| Present Situation | 112.1 | 116.6 | 116.4 | 0.0 | 111.7 | 87.4 | 67.6 |
| Expectations | 78.9 | 85.3 | 83.0 | -12.3 | 88.8 | 86.6 | 77.0 |
| Consumer Confidence By Age Group | |||||||
| Under 35 Years | 105.9 | 123.7 | 120.6 | -7.3 | 116.0 | 106.6 | 93.1 |
| Aged 35-54 Years | 99.9 | 102.1 | 100.6 | -6.6 | 103.9 | 92.4 | 76.8 |
| Over 55 Years | 81.8 | 84.0 | 79.8 | -7.8 | 84.0 | 73.8 | 61.2 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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