Consumer Confidence Nears 15-Year Low

Consumer Confidence Nears 15-Year Low

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The Conference Board’s Consumer Confidence Index, down in January, fell sharply in February, nearing a 15-year low. The Index now stands at 75.0 points (1985=100), down from 87.3 in January, as the Present Situation Index dropped 13.7 points to 100.6 and the Expectations Index declined 11.4 points to a monthly score of 57.9 points.

The 12.3-point decline in the Consumer Confidence Index was the largest change in the Index in more than a year. February also marks the third consecutive month of Index declines.

Six-month buying plans results were mixed, with February figures showing 2.7 percent of consumers planning to buy a home, up from 2.5 percent in January and auto-buying intentions decreasing to 5.4 percent of consumers from 6.7 percent last month.

The percentage of consumers rating current business conditions as “bad” increased to 21.8 percent from 20.1 percent in January. Looking forward six months, 21.4 percent of consumers thought business conditions would be worse, measured against 16.3 percent last month.

Consumer confidence was identified as the number one measure of how the economy was performing by respondents in Home Furnishings Business’ exclusive economic survey, published in the October 2007 issue of HFB.

“The Consumer Confidence Index continues losing ground and, with the exception of the Iraqi War in 2003, is now at its lowest level in nearly 15 years,” said Lynn Franco, director of the Conference Board Consumer Research Center. “The weakening in consumers’ assessment of current conditions, fueled by a combination of less favorable business conditions and a sharp rise in the number of consumers saying jobs are hard to get, suggests that the pace of growth in early 2008 has slowed even further. Consumers’ expectations have also deteriorated significantly and are now at a 17-year low. With so few consumers expecting conditions to turn around in the months ahead, the outlook for the economy continues to worsen and the risk of a recession continues to increase,” Franco added.

The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The cutoff date for February’s preliminary results was Feb. 19.

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