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Consumer Confidence Slips, But Results are Encouraging

The Conference Board's Consumer Confidence Index slipped in February, although it was still better than anticipated and higher than a year ago.

NEW YORK — Consumer confidence slipped in February, although it was still better than anticipated and higher than a year ago.

The Conference Board’s Consumer Confidence Index stands at 104, down from 105.1 last month. The consensus among economists was for the Index to reach 103. In addition, January’s Index was revised higher to 105.1 from 103.4.

More troublesome is the Expectations Index, the component of the Consumer Confidence Index that measures consumers’ sentiments about the future. Expectations fell to 95.7 from 100.4 last month.

However, consumers on the whole were fairly confident about current economic conditions. The Present Situation component of the index jumped to 116.4 from 112.1.

“Although expectations cooled this month, consumers are more optimistic today than they were a year ago,” Lynn Franco, director of The Conference Board’s Consumer Research Center, said in a statement. “Just as important, consumer confidence about current economic conditions, including the labor market, continues to gather momentum. Despite recent fluctuations, both present and future indicators point toward continued expansion in the months ahead.”

Consumer confidence is a closely watched indicator about the health of the economy. Consumer spending accounts for about two-thirds of the nation’s economic activity.

Consumers who said business conditions are “good” declined to 24.9 percent from 26.1 percent, while those who reported that conditions are “bad” fell to 15.6 percent from 18.1 percent. The employment picture also showed signs of strength. Those who said jobs are “hard to get” fell to 22.6 percent from 24.3 percent, while those surveyed who said jobs are “plentiful” remained essentially unchanged at 20.9 percent from 21 percent last month.

Economist Maury N. Harris at UBS noted in a research report on Tuesday that “consumers’ perceptions of the labor market still have not yet reflected the actual improvement in the unemployment rate that began in 2003. We expect the labor market to remain healthy in 2005. Most immediately, we are looking for a rise of 225,000 in payrolls in February, with the unemployment rate ticking up slightly to 5.3 percent after a 0.2 point drop in January.”