consumer confidence deteriorates further in February

By Le Figaro with AFP

Posted on 02/28/2023 at 4:30 p.m.update on 02/28/2023 at 4:55 p.m.

American consumers are showing themselves to be increasingly pessimistic about the economic situation for the next six months and their confidence has deteriorated further, more than expected, in February, according to the index published on Tuesday by the Conference Board. The general index now stands at 102.9 points, against 106 in January, while analysts expected an improvement to 108.4 points, according to the consensus published by briefing.com.

In detail, among the two sub-indices, only the one measuring expectations on the economic situation for the next six months is down. It fell to 69.7 points, against 76 a month earlier, sinking below the 80 point mark which “often signals a recession in the coming year“, specifies the Conference Board in its press release.

The other sub-index, measuring the perception of the current situation, continues to increase. “The current situation index is on the rise due to a favorable view of the situation on the labor market. On the other hand, the outlook seems infinitely more pessimistic, whether in terms of jobs, wages or the economic situation.“, detailed Ataman Ozyildirim, senior director of economics at the Conference Board.

The increase in rates by the Federal Reserve (Fed) in order to fight against persistent inflation is in fact weighing on households, which are seeing their access to credit become more complicated. However, the PCE index, mainly observed by the Fed, rose again in January, with inflation at 5.4%, raising fears of new actions by the American central bank to bring it back to its target, around 2%. If for the moment the rate hikes have not had too much effect on the American economy, with an unemployment rate still very low and order books which remain well filled, the fear is growing to see the economy end up plunging into recession.

US consumers expect inflation to decline over the next 12 months and are beginning to cut back on spending. “Intentions to purchase housing or cars are down, as are those concerning major equipment. Intentions to go on vacation are also downadded Ataman Ozyildirim. Another index measuring consumer confidence, measured by the University of Michigan, painted a different picture for the month of February, showing a more optimistic trend for two months, despite an index still at a historically low level.