Consumer comfort falls

February 24, 2015 11:54 AM

Conference Board consumer confidence index

The Conference Board reported that its overall measure of consumer comfort fell to 96.4 this month from an upwardly revised January reading of 103.8. As such the 7.4-point decline from the highest reading since August 2007 was the largest dip since October 2013. The consensus view among economists surveyed by Bloomberg News was a smaller dip to 99.5. Both measures of confidence fell. The present situation index fell to 110.2 from 113.9 and compares to a year ago reading of 81.0. However, the decline of 9.8-points in the expectations index is also the largest in 14-months and hard to square with the recent decline in gasoline prices. It is up from 765 one year ago.

It remains hard to explain away the dip in consumer confidence in light of record-low interest rates, weakening commuter costs and an amelioration in international threats to the global macro-economic environment. Recently, the so-called labor differential, which nets the reading of jobs plentiful against the jobs hard to get index, has mirrored the significant improvement in the labor market. However, along with the dip in expectations among consumers surveyed, the labor differential index just broke its string of success. The sub-index contained in the latest report pared its recent gain, sliding to -5.7 from -3.9 as more respondents claimed jobs were "hard to get." 

Fewer people claimed jobs were ‘not so plentiful’. When asked about the six-month outlook, fewer people expect better business conditions and less people anticipate more jobs, while fewer people seemed to be expecting income increases and more people projected decreasing incomes.

Chart shows largest fall in confidence since October 2013

About the Author

Andrew is a seasoned trader and commentator of global financial markets. He worked for several London-based banks trading cash and derivatives before moving to the U.S. to attend graduate school. Andrew re-joins Interactive Brokers following a two-year stretch at a major Wall Street broker-dealer as their Chief Economic Strategist. His coverage of stocks, options, futures, forex and bonds regularly surfaces in global media, and over the last several years Andrew has made many TV appearances on Bloomberg, BBC, CNBC and BNN and Yahoo Finance.