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Economic Watch: Consumer Confidence Slips

February 25, 2014

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A measure of how consumers feel about the economy fell this month after increasing in January, according to the data from the private research group The Conference Board.

Its Consumer Confidence Index now stands at 78.1, down from 79.4 in January. The decline was driven by the Expectations Index, which dropped to 75.7 from 80.8, while the Present Situation Index, in contrast, climbed from 77.3 to 81.7, it best level in nearly six years.

“Consumer confidence declined moderately in February, on concern over the short-term outlook for business conditions, jobs, and earnings,” explains Lynn Franco, director of economic indicators at The Conference Board. “While expectations have fluctuated over recent months, current conditions have continued to trend upward ... This suggests that consumers believe the economy has improved, but they do not foresee it gaining considerable momentum in the months ahead.”

Consumers’ appraisal of current conditions improved for the fourth consecutive month. Those claiming business conditions are “good” increased to 21.5% from 20.8%, while those claiming business conditions are “bad” declined to 22.6% from 23.4%.

Consumers’ assessment of the labor market also improved. Those claiming jobs are “plentiful” increased to 13.9% from 12.5%, while those saying jobs are “hard to get” decreased slightly to 32.5% from 32.7%.

Meantime, consumers’ expectations, which had been improving over the past two months, retreated in February. The percentage expecting business conditions to improve over the next six months decreased to 16.3% from 17%, while those anticipating business conditions to worsen increased to 13.3% from 12.2%.

Consumers’ outlook for the labor market was also more pessimistic. Those expecting more jobs in the months ahead declined to 13.3% from 15.1%, while those anticipating fewer jobs increased to 20.6% from 19%. The proportion of consumers expecting their incomes to increase declined from 16.6% to 15.4%, but those anticipating a decrease in their incomes also declined, from 13.9% to 13.1%.

This news comes as record-setting cold weather has taxed a good part of the U.S. this year, both mentally and economically. This has lead to increasing expectations that overall economic growth will be hurt in the current quarter, according to Reuters. However, others say Old Man Winter shouldn’t be getting all the blame for recent disappointing economic reports.

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