The widely reported recent slowdowns in the U.S. economy—only 151,000 jobs added for January and 1.0 percent GDP growth in the fourth quarter, for example—were reflected in the Conference Board’s Consumer Confidence Index for February, which tumbled from 97.8 in January down to 92.2 (1985=100) in February.

Consumers were pessimistic all around in the survey, as the Present Situation Index dropped from 116.6 down to 112.1 from January to February, and the Expectations Index declined from 85.3 to 78.9 during the same period. Over-the-month, fewer consumer said they believe that business conditions are good, while more said they believe that business conditions are bad; more consumers thought jobs were hard to get while fewer consumers said they believe that jobs are plentiful.

Also from January to February, fewer consumers said they believe that business conditions would improve in the next six months, while more consumers said they though business conditions would get worse. The share of consumers who anticipate more available jobs and anticipate an increase in their income in the next six months declined over-the-month, while the share who anticipate fewer available jobs and a reduction in their income increased.

“Consumer confidence decreased in February, after posting a modest gain in January,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers’ assessment of current conditions weakened, primarily due to a less favorable assessment of business conditions. Consumers’ short-term outlook grew more pessimistic, with consumers expressing greater apprehension about business conditions, their personal financial situation, and to a lesser degree, labor market prospects. Continued turmoil in the financial markets may be rattling consumers, but their assessment of current conditions suggests the economy will continue to expand at a moderate pace in the near-term.”

The findings of the Conference Board survey are in line with other recent economic forecasts. According to Fannie Mae’s economic outlook released in mid-February, deteriorating financial conditions and increasing global concerns appear to be hindering economic growth despite a forecasted pickup in consumer spending, a relatively healthy labor market, and residential investment and government spending that is strengthening. As a result of the economic slowdowns, Fannie Mae lowered its forecast for the number of rate hikes that will occur in 2016 from three down to two.

“Continued turmoil in the financial markets may be rattling consumers, but their assessment of current conditions suggests the economy will continue to expand at a moderate pace in the near-term.”

Lynn Franco, the Conference Board

“We believe that the tightening labor market will further boost wages and help increase consumer spending,” Fannie Mae chief economist Doug Duncan said. “Recent survey data reaffirm a relatively healthy jobs market with increased job openings, hires, and quits, as well as decreased layoffs and decent gains in average hourly earnings.”

Also according to the Fannie Mae report, home price appreciation is expected to outpace income growth, but the good news for the housing market is that the home price appreciation will continue to lift underwater borrowers into positive equity.

“We expect our 2016 theme ‘housing affordability constrains as expansion matures’ to hold true as home price gains are likely to outpace household income growth as the year continues,” Duncan said. “However, the expected increase in home prices should help lift underwater mortgages and create a healthier housing market. Meanwhile, increased household formation, low mortgage rates, and easing credit standards and more access to credit for residential mortgages are positive factors for a continued housing expansion. We expect constraints on single-family homebuilding to ease and builders should be able to increase production at a faster pace this year, while the gain in multifamily construction is expected to be more modest than last year.”

The Conference Board reported that the share of respondents planning to buy a lived-in home in the next six months declined over-the-month from 3.7 percent in January to 2.5 percent in February, while the share planning to buy a new home in the next six months also dropped over-the-month from 1.2 percent to 1.1. percent. Despite the monthly declines, however, the trends shown recently in those two categories are climbing from their trough, and February's level of consumer confidence is relatively high by historical standards, according to the National Association of Home Builders.

The Bureau of Labor Statistics (BLS) will release the February Employment Summary on Friday, March 4. The next Federal Open Market Committee (FOMC) meeting will conclude on March 16.

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