NEW YORK — Worries about jobs and the business climate dragged consumer confidence in February to its lowest level in more than four years.
The Conference Board said Tuesday its Consumer Confidence Index fell to 106.8, down from 115.7 in January. It was the fifth consecutive drop in the monthly index, which has not been this low since June 1996.
“Consumers are seeing all the layoff news, they’re hearing all the doom-and-gloom comments, and they’ve gotten worried. There’s no question about it,” said Joel Naroff of Naroff Economic Advisors in Holland, Pa.
The pessimism was reinforced by two reports released by the Commerce Department on Tuesday: Orders to U.S. factories for big-ticket items plunged in January to their lowest level in 19 months, while new home sales plummeted 10.9 percent, the biggest drop in seven years.
For now, the economy continues to walk a tightrope, avoiding a plunge into recession, said Lynn Franco, director of the Conference Board’s Consumer Research Center.
“The erosion in consumer confidence continues to be fueled by weakening expectations regarding business and employment conditions,” Franco said.
The overall February confidence figure was lower than the reading of 110.5 that had been expected by analysts.
Still, one economist noted that some figures in the Conference Board’s report are not as worrisome.
“Generally, it’s a weak number on the headline, but the details show a little more encouragement,” said Gary Thayer, chief economist for A.G. Edwards & Sons in St. Louis.
Thayer pointed to figures showing a growing number of people believe the economy is exhibiting normal conditions, as well as figures indicating more consumers plan to buy
new homes and cars in the
next six months.
The report comes amid intense speculation about whether the Federal Reserve will cut interest rates again before its next meeting, March 20. Thayer and Naroff said they do not believe the drop in confidence will be enough to push the Fed into taking early action.
Consumers continue to be pessimistic about the outlook over the next six months, the Conference Board said. The percentage of consumers expecting a pickup in business conditions declined from 13.1 percent to 11.1 percent, while those anticipating conditions to worsen increased from 15.2 percent to 17.8 percent.
In addition, only 10.2 percent of American consumers expect more jobs to become available, down from 11.7 percent last month. Those expecting fewer jobs increased from 21.5 percent to 27.2 percent.
But 57.9 percent of consumers now believe the economy is exhibiting normal conditions, up from 54.8 percent last month. The numbers of people with plans to buy new homes and cars in the next six months also increased.
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