Sentiment amongst US conumers has been in the duldroms for months; but recent figures suggest confidence is heading towards dire straights. The Conference Board's survey of consumer confidence for February reported a sharp drop from the previous month that far outpaced the contraction that economists had forecasted. With a 12.4 percentage point drop from January, the index fell to 25.0 - its lowest reading on records going back to 1967. This headline reading and its component data represent reflect the growing wave of pessimism that could keep thwart the government's plans to recharge growth and keep the economy on pace for an economic depression.
Looking into the data, the first break is between the present conditions and expectations - both of which were pushing new lows. Current conditions were marred by a labor differential that found 47.8 percent of respondents saying jobs are hard to find against only 4.4 percent that said they were plentiful. It naturally follows that there was a similar sentiment surrounding buisness conditions for which 51.1 percent of those surveyed said were bad versus 6.8 percent voting they were good. The forecast took a much sharper turn for the worse as the sub index dropped from 42.5 to 27.5. This decline was led by a 10.4 percentage point jump in those respondents expecting employment conditions to worsen and a 5.4 percentage point rise in votes for income to decrease. As would be expected, plans to spending on major items such as homes and automobiles fell. Unless consumer confidence rebounds, efforts by policy makers to stabilize growth and the financial markets will fail as the largest component of growth (consumer spending) will not fall into place.
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