Consumer confidence improved in February, with the Conference Board’s index reaching 91.3, up from 88.9 in January.
The Present Situations index – which measures how consumers feel about current business and labor market conditions – climbed from 85.5 to 92.0. However, the Expectations Index which tracks the short-term outlook of consumers dipped slightly to 90.8 in February from 91.2 in January.
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Forecasts had pegged February’s number at 90, following a spike of 5.3% in monthly retail sales for January which easily beat expectations of 1% after they declined in the prior two months.
“After three months of consecutive declines in the Present Situation Index, consumers’ assessment of current conditions improved in February,” said Lynn Franco, senior director of Economic Indicators at The Conference Board. “This course reversal suggests economic growth has not slowed further. While the Expectations Index fell marginally in February, consumers remain cautiously optimistic, on the whole, about the outlook for the coming months. Notably, vacation intentions – particularly, plans to travel outside the U.S. and via air – saw an uptick this month, and are poised to improve further as vaccination efforts expand.”
Although the labor market continues to struggle, Americans are sitting on mounds of unspent savings from two rounds of economic stimulus from Congress that topped $3 trillion, a huge spike in equity for those owning homes and the booming stock market. That, coupled with the fact that higher earners have fared better during the coronavirus outbreak and the resultant shutdowns of many businesses, has made economic recovery from the pandemic uneven.
The improvement in the outlook of consumers comes as January’s surge in coronavirus cases has receded amid the increased rollout of vaccines, with more than 60 million now having been administered, and a drastic drop in new infections.