February 28, 2012 (Chris Moore)
Confidence by U.S. consumers edged slightly higher in February as positive news about employment and economic gains contributed to an increase in the latest Surveys of Consumers by Thomson Reuters/University of Michigan for the sixth consecutive month.
Consumer confidence in February was at its highest level in a year, but despite the more positive economic prospects, consumers still continued to have a dismal outlook when it came to their personal finances.
For the 41st consecutive month, more consumers reported that their incomes had declined than had increased and only one-in-four of the households said that they expected their personal finances to improve in the year ahead.
The majority of the households did not expect to see an increase in their income in the coming year, a streak that has lasted for 28 consecutive months. Only eight percent of the households said they believed they would see an increase in their income.
A record number of consumers spontaneously reported hearing about recent unemployment gains with consumers showing more optimism towards the jobless rate than at anytime since 2004.
Two of the three indices that make up the Index of Leading Economic Indicators posted gains in February, but all three indicators were still below last year’s levels.
The Consumer Sentiment Index climbed 0.4 percent to 75.3 in February, up from 75.0 in January but was down 2.8 percent from 77.5 in February of last year.
The Consumer Expectations Index increased to a level of 70.3 in February, up 1.7 percent from a level of 69.1 in January but was down 1.8 percent from a level of 71.6 in February 2011.
The Current Conditions Index fell 1.4 percent to 83.0 in February, down from 84.2 in January and was 4.5 percent lower than the reading of 86.9 in February of last year.
Richard Curtin, Surveys of Consumers chief economist said, “Consumers have shrugged off concerns about rising gas prices, the European crisis, and election year politics, preferring to focus on the favorable impact of job growth. A potential threat is that consumers expect too much too soon. Improved job prospects may entice many more people to seek work, easily outstripping the number of new jobs created. While election year politics typically raise economic prospects, it may also increase the negative consequences if the promised gains fail to materialize. While growth prospects for consumer spending have improved, the new pace of gains may only edge up to a brisk walk, at best.”
Tags: Surveys of Consumers, Reuters/University of Michigan, consumers, economic slowdown, finances, recession, financial expectations