Consumer Confidence Sank in February; 2 Other Reports Show Less Weakness
Consumer confidence fell this month to a level usually seen only during recessions as American households' expectations about their economic future plunged, according to a report released yesterday.</br></br>Two other reports on last month's new orders for durable goods -- such as cars, appliances, computers and machinery -- and sales of new homes, showed much less weakness and were not nearly as disturbing to analysts as what has been happening to consumer attitudes.</br></br>Falling stock prices, high heating bills, worries about job prospects and a drumbeat of gloomy statements about the economy from Wall Street analysts, company executives and the White House have taken a big toll on consumers' expectations. If they were to pull back on their spending, which accounts for about two-thirds of the nation's economic output, the already weak economy could slide into a recession.</br></br>The Conference Board, a New York-based business research group, said its monthly index of consumer confidence fell to 106.8, down 25 percent from its level of five months ago. But the overall index is a composite of two measures of how consumers regard their present economic situation and what they expect it to be like six months from now. The present-situation index has declined 10 percent since September, while the expectations reading has plunged 40 percent.</br></br>"The erosion in consumer confidence continues to be fueled by weakening expectations regarding business and employment conditions," said Lynn Franco, director of the board's Consumer Research Center. "While the short-term outlook continues to signal a severe economic downturn, consumers' appraisal of current economic conditions suggests we are still undergoing moderate economic growth and not a recession."