Consumer Confidence Is Down Sharply in February

Consumer confidence tumbled in February after a sharp rise late last year, a surprisingly strong reversal that reflected renewed anxiety about the country’s economic future, a widely followed survey reported Tuesday.

The Conference Board index of consumer sentiment tumbled more than 8 points in February to 68.5, compared to a 76.7 reading in January, 78.1 reading in December and 65.6 reading in November.

The research group’s survey was taken amid a new round of big-time corporate layoff announcements and before President Clinton announced his economic revival plan last week. Still, it was one of the first indications that the buoyant consumer mood since the election has weakened.

The survey sent prices soaring and interest rates plunging in the bond market, a sensitive barometer that thrives on bad economic news. Investors concluded that the economy will falter regardless of what Clinton does to stimulate it.

“I think people are settling into the reality that we’re in a slow-growth mode,” said Marshall Front, chief economist at the Stein Roe & Farnham investment firm in Chicago. “Maybe we had a more realistic appraisal this month by consumers.”

The index, calculated on a base of 100, is derived from a survey sent to 5,000 households nationwide, which covers questions ranging from home-buying plans to local job conditions.

It is scrutinized as an important indicator of household financial and employment security, which plays a direct role in consumers’ willingness to borrow and spend.

Consumer Confidence

From a monthly survey of 5,000 U.S. households

Source: The Conference Board