NEW YORK — Consumers lost their confidence last month as short-term concerns over the job market and a growing pessimism in the longer-term outlook weighed them down.
The Conference Board’s Consumer Confidence Index fell to 101.7 in February from 106.8 in January, which represented the highest level of the index since June 2002.
Last month, the two components that make up the index were mixed, with the Present Situation Index rising to 129.3 from 128.8 in January and the Expectations Index falling to 83.3 from 92.1. While the present situation component represents a four-and-a-half-year high, the expectations side is now at its lowest level in three years, excluding the two months following Hurricane Katrina.
Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement that “consumers are growing increasingly concerned about the short-term health of the economy and, in turn, about job prospects.”
Franco added, “If expectations continue to lose ground, the outlook for the remainder of 2006 could deteriorate.”
Economist Maury Harris at UBS wrote in a research note that the “drop in the confidence in February owed solely to the expectations component.” He noted in his report that the Expectations Index is typically a “better indicator of the trend in spending growth than the present situation or the overall index.”
For now, the consumers’ appraisal of overall current conditions held steady, with those claiming conditions are “good” inching up to 26.2 percent from 25.9 percent and those saying conditions are “bad” edged down to 15.5 percent from 15.9 percent.
The labor front is where results were mixed. Consumers who felt that jobs are “plentiful” increased to 27.3 percent from 27 percent, while those who believed that jobs are “hard to get” also moved up to 20.7 percent from 20.3 percent.
The labor market outlook did not represent an upbeat picture as consumers who expected fewer jobs to become available in the coming months rose to 20 percent from 15.2 percent in January. Those who said they expected more jobs dipped to 13.4 percent from 13.6 percent. Not many consumers anticipate their incomes rising in the months ahead, which slipped to 18.6 percent from 19.9 percent in January.
The outlook for the next six months was much bleaker last month than in January, as consumers who expected business conditions to worsen rose to 11.1 percent from 10.5 percent and those who expected business conditions to improve fell to 16 percent from 17.9 percent.