February 10, 2012 / 3:10 PM / 8 years ago

Instant View: Consumer mood worsens in early February

NEW YORK (Reuters) - Americans turned less optimistic about the economy in early February on worries about falling income even as their outlook on the jobs market rose to a record high, a survey released on Friday showed.


“The number is a bit disappointing. One would have thought the improvement in the labor and equity markets last month would have contributed to a number closer to January’s, but instead the index fell about 2.5 points. It still is 15 points above where it was in October. The survey respondents might have been reacting to higher prices at gasoline pumps more than anything else.”


“I’m surprised it’s a bit worse than expected after the much stronger nonfarm payrolls data last week. It’s certainly not great for risk. The consumer remains very skeptical about the recovery at this point. But there is a massive discrepancy between sentiment and action. We are seeing better-than-expected retail sales on a weekly basis. If we get three consecutive months of 200,000-plus new jobs, then sentiment may catch up.”


“It’s broadly as we anticipated. Given the performance of the RBC consumer index, we were looking for a decline on the headline as well. We actually thought the expectations index was going to outperform a little bit but that didn’t materialize. At the end of the day, expectations still remain above the December levels, suggesting the consumer is still holding on to some hope, at least in the short-term.”


“Most analysts thought consumer confidence would lose steam in February after the CB’s CCI fell in January and the Thomson Reuters/University of Michigan Index of Consumer Sentiment did fall back in February, a trend of the survey, with a preliminary score of 72.5 that is 2.5 pts lower than January’s score of 75. Current conditions, and more precisely a negative tone towards current finances, was the heaviest drag. Even though optimism towards the job market kept up, the CSI was unable to hang on to sentiment expressed last month. Market expectations averaged to 74.5.

“While both components slipped in early February, the larger fall occurred within Current Conditions, down to 79.6 from 84.2.

The loss of 4.6 pts puts this measure back to its December level. Only 23% of respondents reported an improved financial situation (which is down from the 29% recorded last month) and 25% of households said their incomes had declined. Expectations — propped by a new all-time record high of respondents reporting job gains anecdotes — retreated from 69.1 to 68. The release pointed out that during this survey, the largest percentage of respondents in the past 25 years said that they expect the unemployment rate to drop.”

Americas Economics and Markets Desk; +1-646 223-6300

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