Updated: 23-Feb-10 10:37 ET

February Consumer Confidence

Updated: 23-Feb-10 10:37 ET

Highlights

• The Conference Board's Consumer Confidence Index declined from 56.5 in January to 46.0 in February. The consensus expected a much more modest drop to 55.0.
• Consumers registered strong negative feelings for both the near and long-term. The present situation index declined from 25.2 to 19.4 while the expectations index fell from 77.3 to 63.8.
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Key Factors

• The drop in the index was much stronger than the decline in February's preliminary reading of the University of Michigan Consumer Sentiment Index and signals a possible further reduction in the revised number.
• The drop in the index comes in the face of falling unemployment, lower gasoline prices, and more positive news about the economy in the media.

Big Picture

• Consumer sentiment indices get way too much attention.  The simple fact is that sentiment does not correlate strongly with consumer spending and thus has little predictive value.  Consumer spending correlates more closely with income.  Sentiment tends to reflect well known factors such as unemployment rates and gas prices more than it predicts future spending patterns.

Category	FEB	JAN	DEC	NOV	OCT
Conference Board	46.0	56.5	53.6	50.6	48.7
Expectations	63.8	77.3	75.9	70.3	67.0
Present Situation	19.4	25.2	20.2	21.2	21.1
Employment ('plentiful' less 'hard to get')	-44.1	-42.1	-45.0	-46.1	-45.9
1 yr inflation expectations	5.2%	5.3%	5.2%	5.2%	5.3%