Consumer Confidence Collapses, Missing Expectations Big Time As Present Situation Index Hits 27-Year Low

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Consumer confidence missed consensus expectations by a wide margin, coming it at just 46.0 vs. 55.0 expected. This was also a substantial drop form January’s 56.5 reading.

Markets are tanking.

The worst part of the report appears to be the Present Situation Index, which collapsed to a 27-year low:

Conference Board:

The Present Situation Index decreased to 19.4 from 25.2. The Expectations Index declined to 63.8 from 77.3 last month. The Consumer Confidence Survey┬« is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS. TNS is the world’s largest custom research company. The cutoff date for February’s preliminary results was February 17th.

Says Lynn Franco, Director of The Conference Board Consumer Research centre: “Consumer Confidence, which had been improving over the past few months, declined sharply in February. Concerns about current business conditions and the job market pushed the Present Situation Index down to its lowest level in 27 years (Feb. 1983, 17.5).

Moreover, there seems to have been a decline in near-term forward expectations as well.

Consumers’ short-term outlook also took a turn for the worse, with fewer consumers anticipating an improvement in business conditions and the job market over the next six months. Consumers also remain extremely pessimistic about their income prospects. This combination of earnings and job anxieties is likely to continue to curb spending.” Consumers’ assessment of current-day conditions soured in February. Those claiming conditions are “good” decreased to 6.2 per cent from 8.5 per cent, while those claiming business conditions are “bad” increased to 46.3 per cent from 44.7 per cent. Consumers’ assessment of the labour market was also more pessimistic.

Perceptions of the jobs market worsened as well.

Those saying jobs are “hard to get” rose to 47.7 per cent from 46.5 per cent, while those saying jobs are “plentiful” decreased to 3.6 per cent from 4.4 per cent. Consumers’ short-term outlook, which had been improving, lost considerable ground in February. The percentage of consumers anticipating an improvement in business conditions over the next six months decreased to 16.7 per cent from 20.7 per cent, while those anticipating conditions will worsen increased to 15.3 per cent from 12.7 per cent. Regarding the outlook for the labour market, the percentage of consumers expecting fewer jobs increased to 24.6 per cent from 18.9 per cent. Those anticipating more jobs will become available in the months ahead declined to 13.4 per cent from 15.8 per cent. The proportion of consumers anticipating an increase in their incomes declined to 9.5 per cent from 11.0 per cent.

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