Source: Economics Group of Wells Fargo Bank, N.A.
Summary
The Consumer Confidence Index fell to 106.7 in February amid downward revisions to past data, revealing confidence remains shaky and has yet to recover.
Revisions Sap January Gain and Moderating Labor Market Dents Optimism
Consumer confidence remains shaky—that’s the takeaway from the February Consumer Confidence report. Despite the consensus expectation among 60 forecast submissions to Bloomberg calling for an increase in the Consumer Confidence Index, it slipped to 106.7 in February (chart). The outturn is surprising to us given rising equity values, slowing inflation and a still-sturdy labor market. But if you ask consumers, they’re growing increasingly concerned about labor prospects, and that’s to blame for this drop in confidence.
Confidence dropped by the most in four months in February, slipping 4.2 points. While the drop looks less bad in light of downward revisions to past months’ data, it’s still not great. Prior to revisions, confidence had hit a two-year high in January, but now the data suggest confidence was just the highest in six months at the start of the year.
The drop in consumers perceptions of current conditions reversed the January gain, driving the Present Situation Index down to the level that prevailed in December (chart). Household expectations also weakened in February. The Expectations Index declined by the most in four months (-1.7 points) and marked the second consecutive decline.