Newsmax TV & Webwww.newsmax.comFREE - In Google Play
Newsmax TV & Webwww.newsmax.comFREE - On the App Store
Tags: us | consumer | mood | worsens

Consumer Mood Turns Darker on Income Fears

Friday, 10 February 2012 10:15 AM EST

Americans felt worse about their personal finances in early February, even as they saw a light at the end of the tunnel for the jobs market, a survey released on Friday showed.

The Thomson Reuters/University of Michigan overall index of consumer sentiment fell to 72.5 in early February from January's 75.0, which was the highest level since February 2011.

The latest figure fell short of the median forecast of 74.5 among economists polled by Reuters.

"This pattern of responses — less favorable current assessments and more favorable prospects — is not surprising. It simply indicates that consumers find their current situation all the harder to bear when improvement is finally in sight," said survey director Richard Curtin said in a statement.

URGENT: End of America’s Middle Class Now a Startling Reality


An improving financial situation was reported by just 23 percent of all consumers surveyed in early February, down from 29 percent in January and last year's 30 percent.

One in four families reported declines in income in the early February survey, even as official data have shown overall U.S. income growing since last August, albeit at a slow pace.

A separate survey released in late January by the Conference Board also indicated a pullback in consumer optimism partly because of income jitters.

Angst about income did not derail expectations of a moderate 2.2-percent increase in U.S. consumer spending this year, Curtin said.

The consumer sector accounts for about two-thirds of U.S. economic activity.

Financial markets did not react to the pullback in consumer confidence. Wall Street stocks fell on fears Greece might not receive a bailout to avoid a messy default, while the dollar and U.S. Treasuries were higher.

"Overall, the souring in household moods in February is somewhat at odds with the improvements seen in labor market conditions and the economic recovery more generally in recent months. However, when seen in the context of the sustained gains since August, the modest pullback in confidence not may not be that surprising, after all," said Millan Mulraine, senior macro strategist at TD Securities in a research note.

While more households worried about shrinking paychecks, they reported a record level of optimism about job prospects. Last week, the U.S. Labor Department said the monthly jobless rate fell to 8.3 percent in January, a near three-year low.

"More consumers spontaneously mentioned hearing about increases in employment and job opportunities than ever before recorded in the long history of the surveys," Curtin said, adding that positive reports of job growth set a record in early February.

The survey's barometer of current economic conditions fell to 79.6 in early February from 84.2 in January. Analysts had expected a figure of 84.5.

The gauge of consumer expectations dipped to 68.0 from 69.1. January's figure was the highest level since May 2011 and for February, analysts had predicted an even higher reading of 69.5.

In an uncertain economic climate, consumers shaved their short-term inflation outlook, but raised their expectations on long-term inflation.

The survey's expectations for one-year inflation slipped to 3.2 percent from 3.3 percent in January, while the survey's five-to-10-year inflation outlook rose to 2.9 percent, matching the level set a year ago, from 2.7 percent in the previous four months.

© 2023 Thomson/Reuters. All rights reserved.

Friday, 10 February 2012 10:15 AM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
Get Newsmax Text Alerts

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved
© Newsmax Media, Inc.
All Rights Reserved