NEW YORK – Confidence among U.S. consumers fell sharply this month, to its lowest level since 2003, after declining in five of the past six months, The Conference Board said today.
The board’s Consumer Confidence Index fell 14.1 percent to 75.0 points in February (1985 = 100) from the previous month’s revised level of 87.3 points.
The decline was steeper than anticipated, based a Bloomberg News survey of 63 economists, whose median forecast called for the index to fall to 82.0 points from the originally reported January level of 87.9.
The index “continues losing ground and – with the exception of the Iraqi War in 2003 – is now at its lowest level in nearly 15 years,” since the November 1993 level of 71.9 points, Lynn Franco, director of the board’s Consumer Research Center, said in a statement today.
“The weakening in consumers’ assessment of current conditions – fueled by a combination of less favorable business conditions and a sharp rise in the number of consumers saying jobs are hard to get – suggests that the pace of growth in early 2008 has slowed even further.”
The index is based on a monthly survey conducted for the Conference Board by custom research firm TNS. The cutoff date for this month’s preliminary results was Feb. 19.
In the survey, the share of consumers saying business conditions are “bad” increased to 21.8 percent last month from 20.1 percent in January, while the share saying conditions are “good” fell to 18.5 percent from the previous month’s 20.6 percent.
Their assessment of the job market was considerably more pessimistic than in January, with 23.8 percent seeing jobs as hard to get, up from 20.6 percent last month, and only 20.6 percent seeing jobs as plentiful, down from January’s 23.8 percent.
“Consumers’ expectations have also deteriorated significantly, and are now at a 17-year low,” Franco noted.
The board’s Expectations Index – a gauge of consumers’ expectations for the economy in the next six months – fell to 57.9 points in February from 69.3 points in January. This month’s level is the lowest since the 55.3 points of January 1991.
The share of consumers expecting business conditions to worsen over the next half-year rose to 21.4 percent from January’s 16.3 percent, while the share expecting conditions to improve fell to 9.5 percent from the previous 11.5 percent. Respondents’ expectations for the job market and their own personal incomes also were bleaker this month than last.
“With so few consumers expecting conditions to turn around in the months ahead, the outlook for the economy continues to worsen and the risk of a recession continues to increase,” Franco said
Russell Price, a senior economist at H&R Block Financial Advisors in Detroit, agreed, telling Bloomberg News: “Consumers are being hit with negative news on just about all fronts.”
The Conference Board is a nonpartisan, nonprofit business membership and research organization with offices in New York City, Chicago and abroad. Additional information is available at www.Conference-Board.org.
