Consumer Confidence Falls Sharply in February

February 23, 2010 - 11:30 AM
Economists watch the confidence numbers closely because consumer spending accounts for about 70 percent of U.S. economic activity.
New York (AP) - A monthly poll showed consumers' confidence took a surprisingly sharp fall in February amid rising job worries. The decline ends three straight months of improvement and raises concerns about the economic recovery.
 
The Conference Board said Tuesday its Consumer Confidence Index fell almost 11 points to 46 in February, down from a revised 56.5 in January. Analysts were expecting only a slight decrease to 55.
 
One gauge, measuring consumers' assessment of current conditions, dropped to 19.4 from 25.2, the lowest level since 1983. The other barometer, which measures their outlook over the next six months and had been rising since October 2009, fell to 63.8 from 77.3.
 
The overall Consumer Confidence Index hit a historic low of 25.3 in February 2009 but then enjoyed a three-month climb to 54.8 in May, fueled by signs the economy might be stabilizing. Since then, it has been mired in a narrow range, dropping as low as 47, as rising unemployment took a toll, before climbing again for a three-month stretch.
 
February's reading is well below the 61.4 figure in September 2008, when the financial crisis intensified with the collapse of Lehman Brothers. The index has had an average reading of 95.6 since the Conference Board starting tracking the figures in 1967.
 
Economists watch the confidence numbers closely because consumer spending accounts for about 70 percent of U.S. economic activity.
 
"The combination of earnings and job anxieties is likely to continue to curb spending," Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement.
 
The results, based on a sample of 5,000 U.S. households with cutoff date was Feb. 17, showed consumers' assessment of current job opportunities and job prospects over the next six months eroded.
 
Those saying that jobs are "hard to get" rose to 47.7 percent from 46.5 percent, while those saying jobs are "plentiful" decreased to 3.6 percent from 4.4 percent.
 
As for the outlook for the job market, the share of consumers expecting fewer jobs increased to 24.6 percent from 18.9 percent. Those anticipating more jobs will become available in the months ahead declined to 13.4 percent from 15.8 percent. The proportion of consumers expecting an increase in their incomes dropped to 9.5 percent from 11.0 percent.