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Tribune News Service
Tribune News Service
National
Reade Pickert

US consumer confidence drops on more pessimistic outlook

U.S. consumer confidence unexpectedly declined in February, as rising prices and deepening concerns about the outlook outweighed the near-term strength of the labor market.

The Conference Board’s index decreased to 102.9 from a 106 reading in January, data out Tuesday showed. The median forecast in a Bloomberg survey of economists called for the gauge to rise to 108.5.

A measure of expectations — which reflects consumers’ six-month outlook — decreased to 69.7, the lowest since July, while the group’s gauge of current conditions rose to 152.8.

The decline in confidence reflects more pessimistic views on jobs, incomes and business conditions in the next six months. Inflation is proving to be stickier than many anticipated, and the Federal Reserve is expected to raise interest rates higher. Not only are the higher prices eroding Americans’ purchasing power, but aggressive Fed policy risks tipping the economy into recession.

That said, layoffs so far have largely been contained to the technology and finance sectors, and the unemployment rate across the economy has fallen back to a 53-year low. The share of consumers who said jobs were “plentiful” surged to 52%, the highest since April. Those who say jobs are hard to get ticked down.

While consumer spending rebounded at the start of the year, forward-looking signs are tentative. Americans scaled back plans to buy major appliances, homes and cars in February, and vacation intentions also declined, the report said.

“Consumers may be showing early signs of pulling back spending in the face of high prices and rising interest rates,” said Ataman Ozyildirim, senior director of economics at the Conference Board.

Executives can’t seem to find a consensus on how they describe the health of consumers, judging by recent earnings calls. Live Nation Entertainment Inc. Chief Executive Officer Michael Rapino said they continue to see strong consumer demand globally “with no sign of any slowdown.”

On the other hand, retailer TJX Cos. Inc. CEO Ernie Herrman pointed to a greater shift toward value, and Molson Coors Beverage Co. stressed the uncertainty of the consumer landscape.

The median inflation rate seen over the next 12 months declined in February. Data out last week showed the Fed’s preferred inflation metrics accelerated in another sign of stubborn price pressures.

(With assistance from Chris Middleton.)

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