Market Wrap – Consumer Confidence weakens

Stock markets turned higher as the greenback headed lower after the latest consumer confidence data from the United States showed a weakening in February pushing back on the aggressive Fed rate hike narrative.

Gold rose slightly, although flows are competing against United States bond yields that are suddenly much more attractive than they were for all of the 2010s.

Breaking down the data, the Conference Board Consumer Confidence Index decreased in February for the second consecutive month. The Index now stands at 102.9, down from 106.0 in January.

The Present Situation Index, based on consumers’ assessment of current business and labour market conditions, increased to 152.8 from 151.1 last month.

The Expectations Index based on consumers’ short-term outlook for income, business, and labour market conditions fell further to 69.7 from a downwardly revised 76.0 in January.

Notably, the Expectations Index has now fallen well below 80-the level which often signals a recession within the next year. It has been below this level for 11 of the last 12 months.

Ataman Ozyildirim, Senior Director, Economics at The Conference Board said “Consumer confidence declined again in February. The decrease reflected large drops in confidence for households aged 35 to 54 and for households earning $35,000 or more.” 

He also added “While consumers’ view of current business conditions worsened in February, the Present Situation Index still ticked up slightly based on a more favourable view of the availability of jobs. In fact, the proportion of consumers saying jobs are ‘plentiful’ climbed to 52.0 percent-back to levels seen in the spring of last year. However, the outlook appears considerably more pessimistic when looking ahead.

Expectations for where jobs, incomes, and business conditions are headed over the next six months all fell sharply in February.”

Fewer consumers are planning to purchase homes or autos and they also appear to be scaling back plans to buy major appliances. Vacation intentions also declined in February.