United States: Consumer confidence soars in February
Despite increased market volatility, U.S. consumers were particularly upbeat in February as a result of solid job prospects and a more positive assessment of the economy following the Republican tax cuts. The Conference Board’s monthly consumer confidence index rose to 130.8 in February, up from a revised 124.3 in January (previously reported: 125.4) and the highest figure since November 2000. The print came above market expectations of a more moderate increase to 126.4 and keeps the index comfortably above the 100-point threshold that separates consumer optimism from pessimism.
The solid increase in the headline reading reflected consumers’ improved appraisal of present-day conditions. Compared with the previous month, more consumers responded that business conditions are good, while the percentage that reported a deterioration in current business conditions declined markedly. Similarly, views on the labor market were robust, with the labor differential—the difference between the percentage of respondents who state that jobs are plentiful and those who say that jobs are hard to get—widening significantly to 24.7 in February from 20.9 in January.
Likewise, February saw an improvement in consumers’ assessment of economic conditions in the near future. The percentage of consumers expecting better business conditions over the next six months markedly in February, while the percentage of those anticipating a worsening in business conditions declined. Their prospects regarding labor conditions were also more upbeat, as were their short-term income projections. That said, recent market turmoil was seen in the report, with the differential between consumers expecting stocks moving higher in the next six months and those seeing equity prices easing in the same period shrinking decidedly in February.
All told, very robust consumer confidence is expected to continue supporting growth this year, reflecting a strong pace of job creation and accelerating payroll compensation. Some federal tax changes came into full effect for a majority of employees in early February, which also likely buoyed this month’s estimate, and are expected to buttress private spending in the months to come.