U.S. consumer confidence fell in February for the second consecutive month, according to data released Tuesday.
The Conference Board’s index of consumer confidence declined to 110.5 from January’s downwardly revised reading of 111.1.
Consumers felt somewhat better about current conditions than they had in January, no doubt reflecting the retreat of the virus and the lifting of many restrictions or requirements. But the outlook for the future dimmed as consumers accepted to reality that high inflation is likely to be persistent.
“Consumer confidence was down slightly for a second consecutive month in February,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The Present Situation Index improved a touch, suggesting the economy continued to expand in Q1 but did not gain momentum. Expectations about short-term growth prospects weakened further, pointing to a likely moderation in growth over the first half of 2022. Meanwhile, the proportion of consumers planning to purchase homes, automobiles, major appliances, and vacations over the next six months all fell.”
January was revised down from the earlier report of 113.8, an indication that the year started on an even grimmer note than thought.
Consumers were less positive about their own short term financial prospects, the outlook for the labor market, and expectations for business conditions. Views of current business conditions and the labor market were mixed, with the share of consumers saying each was good declining while the share saying each was bad also declined.
“Concerns about inflation rose again in February, after posting back-to-back declines. Despite this reversal, consumers remain relatively confident about short-term growth prospects. While they do not expect the economy to pick up steam in the near future, they also do not foresee conditions worsening. Nevertheless, confidence and consumer spending will continue to face headwinds from rising prices in the coming months.”
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