Consumers Looking Up Just a Little

David Deem

After three months of consecutive decline, consumers are starting to feel better about the overall economic outlook for the U.S.

The Conference Board’s Consumer Confidence Index® increased in February and now stands at 131.4, up from 121.7 in January, and the Present Situation Index—which is based on consumers' assessment of current business and labor market conditions—improved from 170.2 to 173.5. The index that measures consumers’ short-term outlook also improved—increasing from 89.4 last month to 103.4 this month.

Why the sudden shift toward positive territory? An easing of concern over financial-market volatility and an end to the government shutdown drama, for one thing.

"Looking ahead, consumers expect the economy to continue expanding,” said Lynn Franco, senior director of Economic Indicators at The Conference Board. "However, according to The Conference Board's economic forecasts, the pace of expansion is expected to moderate in 2019."

While the confidence is trending upwards, it is hardly gangbusters. The number of consumers who viewed business conditions as “good” increased from 36.4 percent to 41.2 percent in February, but the number who viewed them as “bad” held steady. Meanwhile, the number of consumers who viewed jobs as “plentiful” actually decreased just slightly from 46.7 percent to 46.1 percent. However, those who viewed jobs as “hard to get” also decreased from 12.6 percent to 11.8 percent.

The biggest sign of optimism came in the form of consumers’ outlook about the short-term future, with those expecting business conditions to improve over the next six months increasing from 16.3 percent to 19.7 percent, and those expecting business conditions to worsen decreasing from 13.8 percent to 8.9 percent.

The outlook for jobs is also on the rise. Those expecting the availability of more jobs in the months ahead increased from 15.3 percent to 18.5 percent, while those anticipating fewer jobs declined from 16.2 percent to 12.2 percent. More consumers expected an improvement in income, rising from 17.7 percent to 20 percent, but more also expected a decrease, rising from 6.8 percent to 8.5 percent.

The trajectory of consumer confidence will continue to be impacted by government stability, or lack thereof, and its impact on the economy.



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