US consumers’ optimism wanes
US consumer confidence fell more than forecast in February as the initial elation over a drop in fuel prices waned and Americans grew less optimistic about prospects for employment and income.
The Conference Board’s sentiment index decreased to 96.4 from a revised January reading of 103.8, which was the highest since August 2007, the New York-based private research group said on Tuesday. The median forecast of 80 economists in the Bloomberg survey called for a decrease to 99.5.
A recent increase in gasoline costs from a six-year low may be curbing the enthusiasm of some households after a plunge in prices last year and a pickup in hiring helped confidence surge. Further improvement in the labor market that propels bigger pay raises will be needed to support sentiment through 2015.
“All the confidence gauges are going to continue to give back ground as the novelty of lower gas prices dissipates,” said Mike Englund, chief economist at Action Economics LLC in Boulder, Colorado. He is among the best forecasters of consumer confidence in the past two years, according to data compiled by Bloomberg.
Estimates in the Bloomberg survey ranged from 95 to 109 after an initial January reading of 102.9. The Conference Board’s gauge averaged 96.9 during the last expansion and 53.7 during the recession that ended June 2009.
Consumer confidence dropped to a reading of 96.4 in February, pulling back from its highest level since August 2007.
Another report on Tuesday showed home prices in 20 US cities appreciated at a faster pace in the year ended in December, a sign that a limited supply is forcing up property values. The S&P/Case-Shiller index increased 4.5 percent from December 2013, after rising 4.3 percent in the year ended in November. Nationally, prices rose 4.6 percent yearover-year in December.
Stocks rose as Federal Reserve Chair Janet Yellen signaled that a change in the central bank’s guidance on interest rates won’t lock it into a timetable for tightening.
“It is important to emphasize that a modification of the forward guidance should not be read as indicating that the committee will necessarily increase the target range in a couple of meetings,” Yellen said in remarks prepared for delivery
Personal outlays before the Senate Banking Committee.
The Conference Board’s gauge of present conditions dropped to 110.2 in February from 113.9 in the prior period. The share of Americans who said business conditions were good decreased to 26 percent from 28.2 percent.
Consumers’ outlooks
The index of consumer expectations for the next six months fell to 87.2 from 97 in January. The 9.8-point slump was the biggest since a federal government shutdown in October 2013.
“Despite this month’s decline, consumers remain confident that the economy will continue to expand at the current pace in the months ahead,” Lynn Franco, director of economic indicators at the Conference Board, said in a statement.
The group’s data showed Americans’ assessments of current and future labor-market conditions deteriorated. The share that said jobs were currently hard to get rose to 26.2 percent from 24.6 percent.
The proportion of consumers expecting more jobs to become available in the next six months declined to 13.4 percent, the lowest since November 2013, from 17.3 percent in January.
The share of respondents that said they expected their incomes to grow in the next half year decreased to 15.1 percent in February, the weakest reading since December 2013, from 19.5 percent last month.
The report showed purchase plans were mixed, with fewer respondents indicating they would buy a new car in the next six months and more saying they would probably buy appliances and homes.