Consumer Confidence Fell Slightly In February

The headline number of 110.5 was a decrease of 0.6 from the final reading of 111.1 for January.

The Conference Board Consumer Confidence Index® fell slightly in February, after a decrease in January. The Index now stands at 110.5 (1985=100), down from 111.1 in January. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—improved to 145.1 from 144.5 last month. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—declined to 87.5 from 88.8. “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. Expectations about short-term growth prospects weakened further, pointing to a likely moderation in growth over the first half of 2022. Meanwhile, the proportion of consumers planning to purchase homes, automobiles, major appliances, and vacations over the next six months all fell.” Read more

Putting the Latest Number in Context

The chart below is another attempt to evaluate the historical context for this index as a coincident indicator of the economy. Toward this end, we have highlighted recessions and included GDP. The regression through the index data shows the long-term trend and highlights the extreme volatility of this indicator. Statisticians may assign little significance to a regression through this sort of data. But the slope resembles the regression trend for real GDP shown below, and it is a more revealing gauge of relative confidence than the 1985 level of 100 that the Conference Board cites as a point of reference.

For an additional perspective on consumer attitudes, see the most recent Reuters/University of Michigan Consumer Sentiment Index. Here is the chart from that post.

And finally, let's take a look at the correlation between consumer confidence and small business sentiment, the latter by way of the National Federation of Independent Business (NFIB) Small Business Optimism Index. As the chart illustrates, the two have tracked one another fairly closely since the onset of the Financial Crisis, although a spread appears infrequently, with the most recent spread showing up 2015 through the present.