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Consumers lost confidence in the U.S. economy in February, as concerns about inflation dampened expectations for the future, the Conference Board reported on Tuesday.
The organization’s consumer confidence index fell slightly to 110.5, from 111.11 in January following a decline a month earlier.
The present situation index – measuring current economic conditions – improved to 145.1 from 144.5 in January. The expectations index – a measure of how consumers view the short-term outlook for the economy – was 87.5, down from 88.8 in January.
“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.”
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“Expectations about short-term growth prospects weakened further, pointing to a likely moderation in growth over the first half of 2022,” she added. “Meanwhile, the proportion of consumers planning to purchase homes, automobiles, major appliances, and vacations over the next six months all fell.”
Franco said that while inflation poses a risk and consumers do not expect the economy to gain strength in the coming months, “they also do not foresee conditions worsening. Nevertheless, confidence and consumer spending will continue to face headwinds from rising prices in the coming months.
In recent months, consumer surveys have discovered conflicting sentiment among Americans with the Conference Board finding a more positive tone and the University of Michigan sentiment index being more downbeat. The Conference Board is a shorter set of questions and tends to do well when the labor markets are good, as they are now, and the longer Michigan survey doing poorly when inflation is rising, like now.
“Given the robust growth outlook, we are inclined to side with the Conference Board’s upbeat consumer confidence reading,” a report comparing the two by BCA Research said on Monday. “We do not expect that flush households with pent-up demand will turn into misers.”