Index of Consumer Confidence Drops

A widely watched indicator of consumers’ confidence in the economy slipped in February but remained well above its levels of a year ago, a private research group reported Tuesday.

The Conference Board said its consumer confidence index dipped to 104 this month, down from a revised 105.1 in January, as optimism about business conditions over the next six months declined. The latest figure was slightly above what analysts were expecting.

Lynn Franco, director of the Conference Board’s research division, called the reading an indicator that consumers expect moderated but continued growth in the economy.

“We’re not going to fall off a cliff and head into a recession, but we’re not likely to gather substantial momentum either and see growth rates in excess of 5%,” Franco said. “They’re expecting more of the same. Given that we’re continuing to expand, that’s good news.”

Economists closely watch gauges of consumer confidence since spending by individuals makes up about two-thirds of economic activity.

Despite the worsening in expectations about business conditions, consumers’ views about labor conditions improved slightly. Those saying that jobs were hard to get fell to 22.6% from 24.3%, while those saying jobs were plentiful were essentially unchanged at 20.9%.

On the whole, consumers’ assessment of current economic conditions continued to generally improve. Those saying current business conditions were bad declined to 15.6% from 18.1%, while those saying conditions were good slipped to 24.9% from 26.1%.

The survey by the Conference Board, a New York-based business research group, is based on responses received by Feb. 15 from a sample of 5,000 U.S. households. The index stood at 88.5 a year ago.

The survey found a decline in consumers’ confidence about the outlook for business conditions over the next six months, with those expecting conditions to improve falling to 17.8% from 22%. Those expecting conditions to worsen stayed the same at 7.8%.

Expectations for the labor market’s outlook were also less optimistic, with 15.2% of respondents expecting more jobs to become available over the coming months, compared with 16.6% last month. Also, 16.8% expect fewer jobs, up from 15.1% last month.