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Economy in Brief

U.S. Consumer Confidence Strengthens to 2001 High
by Tom Moeller  February 28, 2017

The Conference Board Consumer Confidence Index for February jumped to 114.8, the highest level since July 2001. The Action Economics Forecast Survey had looked for a modest decline to 111.0. During the past thirty years, there has been a 70% correlation between the level of consumer confidence and the y/y change in real PCE.

The rise in confidence was due to a strengthened present situation reading of 133.4 (16.0% y/y). Also increasing was the expectations figure to 102.4 (17.0% y/y).

Respondents indicating that business conditions are "good" was steady at 28.7%, while those saying business conditions are "bad" eased to 13.2%. Respondents stating that jobs are "plentiful" slipped to 26.2%, while those claiming jobs are "hard to get" fell to 20.3%. This change in views on labor market conditions led to a steady labor market differential (a reliable indicator of the unemployment rate) of 5.9 percentage points, which was near the highest level since 2007.

The percentage expecting business conditions to improve over the next six months rose to 24.0%, near the recovery high. For labor markets, the percentage expecting more jobs in the months ahead gained to 20.4%, also near the recovery high. The percentage of consumers expecting their incomes to rise held steady 18.3%, but was down from the December high of 21.5%.

Expectations for the inflation rate in twelve months held steady at 4.9%, the highest level since September. The percentage expecting higher interest rates over the next twelve months reversed the January surge with a decline to 67.0%.

The rise in the headline confidence index was due to improved optimism amongst individuals over age 55. Confidence amongst individuals aged 35-to-54 also increased. Respondents under age 35 registered less confidence, which was well off versus the June high.

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 % 2016 2015 2014
Consumer Confidence Index 114.8 111.6 113.3 22.1 99.8 98.0 86.9
  Present Situation 133.4 130.0 123.5 16.0 120.6 111.7 87.4
  Expectations 102.4 99.3 106.4 17.0 86.1 88.8 86.6
Consumer Confidence By Age Group
  Under 35 Years 116.3 129.2 124.4 33.7 122.4 116.0 106.6
  Aged 35-54 Years 116.1 114.2 117.0 14.7 106.2 103.9 92.4
  Over 55 Years 110.0 102.1 103.7 36.0 84.6 84.1 73.8
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