Video: Cranky consumers

updated 2/24/2004 2:24:02 PM ET 2004-02-24T19:24:02

Consumer confidence tumbled in February, as persistent worries about jobs tarnished Americans’ optimism, an industry group reported Tuesday.

The Conference Board said its consumer confidence index dropped more than nine points to 87.3, following a rise in January to a revised reading of 96.4. That reading was the index’s highest since mid-2002.

Analysts had expected a decline, but the index still came in significantly below their consensus forecast for a reading of 92.3.

“Consumers began the year on a high note, but their optimism has quickly given way to caution,” said Lynn Franco, director of the Conference Board’s Consumer Research Center.

Consumers remain disheartened with current economic conditions, and at the core of their disenchantment is the labor market.”

The confidence reading is followed closely because consumer spending accounts for two-thirds of the economy. Consumers who feel more upbeat about the economy are likely to spend more, while those who remain pessimistic may curb their purchases.

The downturn in confidence is a sign that consumers are disturbed by changes in the job market that have quickly become a key issue in the presidential campaign, economists said.

“The labor market is actually improving, not very rapidly, but it’s improving,” said Sung Won Sohn, chief economist Wells Fargo & Co, Minneapolis. “But the perception is otherwise because a lot of the publicity that we’ve gotten from the politicians and debates about whether outsourcing is good or bad, so people are feeling pretty uncomfortable about the labor market situation.”

The dropoff in confidence reflects consumer uncertainty over both the current business climate and economic conditions in the coming six months.

In February, an index measuring consumers’ assessment of current conditions dropped to 73.1 from 79.4 the previous month. Those describing the present climate as good declined to 19.3 percent from 21.9 percent in January. Those who said conditions are bad increased to 25.1 percent from 22.9 percent.

The sentiment regarding jobs was similarly depressed, with those saying positions are hard to get rising to 32.1 percent from 31.6 percent, while those saying jobs are plentiful slipped to 11.8 percent from 12.3 percent.

In January, Americans’ doubts about the current economy were tempered by a rosier outlook for the future. But that was reversed in February.

The Conference Board’s measure of consumer expectations for the next six months fell to 96.8 from 107.8 in January. Those who expect the economy will improve in the short run dropped to 21.8 percent from 27.6 percent. Meanwhile, the number who expect conditions to worsen rose to 8.7 percent from 6.7 percent.

Those anticipating more jobs declined to 18.7 percent from 22.0 percent. The proportion who expect fewer jobs rose to 18.1 percent from 15.0 percent. Those who expect a rise in their incomes declined to 16.7 percent from 19.2 percent.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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