U.S. Consumer Confidence Increases To Highest Since 2008

Consumers must like the combination of low price inflation, low interest rates and an improved job market. The Conference Board reported that the February index of consumer confidence rose 8.6% to 70.4 from an upwardly revised 64.8 in January. (The latest figures reflect revisions back to November.) The latest was the highest level since February 2008 and exceeded Consensus expectations for a reading of 64.0. During the last ten years there has been a 77% correlation between the level of confidence and the 12-month change in real personal consumption expenditures. The Conference Board data can be found in Haver's CBDB database.

The February improvement reflected a 7.4% m/m gain to 33.4 in the present situations component; its highest since November 2008. Business Conditions were seen as good by an improved 12.4% of respondents. However, jobs were seen as hard to get by a lesser 45.7%, the least since  August but jobs were seen as plentiful by an increased 4.9%. That was just above the series' historic low of 3.1% reached in November, 2009.

The expectations component rose 8.9% from January to the highest level since December 2006. Business conditions in six months were expected to be better by an improved 24.4% of respondents while more jobs were expected by 19.8%. Consumers expect the inflation rate in twelve months to be 5.6%. It's risen from a low of 4.9% this past July but remained down from the 2008 high of 7.7%. Interest rates in twelve months were expected to be higher by 52.2% of respondents, down from the April high of 56.1%. Just 14.1% expected rates to fall. A slightly lesser 35.7% of respondents expected stock prices to rise, near the late-2009 high; 28.2% expected prices to fall.