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The Conference Board’s Consumer Confidence Index dropped sharply in February to a 10-year low.
The closely watched survey taken since 1967 by the Conference Board, a New York-based not-for-profit research organization, shows the index now stands at 64.0, down more than 14 points from 78.8 in January.
This marks the third consecutive monthly drop for the index.
The last time it was lower was in October of 1993 when it reached 60.5.
The monthly survey is based on a representative sample of 5,000 United States households. The results are compared to the base year, 1985, when the index was set at 100. NFO WorldGroup, a member of The Interpublic Group of Companies conducted the survey.
Consumers’ assessment of the employment outlook and their expectations for the future turned bleak this month, according to the survey.
Those rating current business conditions as “bad” rose to 30.7 percent from 26.7 percent. Consumers reporting jobs are hard to get rose to a nine-year high of 30.1 percent from 28.9 percent. And consumers anticipating fewer jobs to become available in the next six months surged to 28.4 percent from 21.2 percent.
The proportion of consumers anticipating an increase in their income dropped to 15.2 percent, an all-time low, from 18.4 percent.
“Lackluster job and financial markets, rising fuel costs, and the increasing threat of war and terrorism appear to have taken a toll on consumers,” said Lynn Franco, director of the Conference Board’s Consumer Research Center. “This month’s confidence readings paint a gloomy picture of current economic conditions, with no apparent rebound on the short-term horizon.”
But Scott Rasmussen Public Opinion Research begs to differ with Franco’s gloomy conclusion; His numbers suggest there’s hope on the horizon.
Rasmussen asserts the Conference Board overstated the magnitude of the decline in consumer confidence from January to February. More significantly, Rasmussen found consumer confidence has been on an upswing for nearly two weeks.
The Rasmussen Economic Confidence Index, which measures the economic confidence of Americans on a daily basis, bottomed out at 86.5 on Feb. 13.
But the index has been “trending up” and is now six points above the Feb. 13 low at 92.3.
Barring a reversal in the next couple of days, Rasmussen’s data puts the index higher at the end of this month than it was at the end of last month.
The ABC/Money Magazine Consumer Comfort Index released today also shows an uptick in economic confidence in the last three weeks.
The ABC/Money Comfort index, based on ratings of the economy, personal finances and the buying climate, is creeping up to a five-month high.
It stands at -19 on its scale of +100 to -100, up from -27 on Feb. 2. After its mid- to late-January stumble, the index is now back to its level at the start of the year.
According to ABC/Money, 30 percent of Americans now say the economy’s in excellent or good shape. That’s still far from a positive rating, but it has moved up six points in the last three weeks to its most since September 2002.
Thirty-five percent of respondents call it a good time to buy things and 56 percent say their own finances are OK.
Rasmussen points to shortcomings with the Conference Board’s methodology for its data being a bit dated.
One factor is that the Conference Board’s survey is conducted via mail so there is a built-in time lag, according to Rasmussen, between the time when respondents complete the survey and the time when results are tabulated and reported. When the month-end figure is released, some of the data collected are already three or more weeks old.
The Conference Board’s report also represents an average reading for the entire month.
In contrast, the Rasmussen index is based upon 500 telephone interviews conducted every night – approximately 15,000 interviews a month – and results are presented using a three-day rolling average of the data collected within the past 63 hours.
Franco emphasized the Conference Board’s finding is preliminary, based on the surveys received over the first 18 to 21 days of the month. She said the figure then gets revised at the end of the month according to the surveys that come in after the 21st of the month. She stressed the revision is always statistically insignificant.
“There really is a minor revision, so the mail lag doesn’t come into play,” she told WorldNetDaily.
As for the perceived shortcoming due to the figure being an average over the month, Franco said: “We’re trying to get a pulse on a variety of factors over the month. How people feel Tuesday doesn’t really matter on Wednesday.”
Analysts monitor consumer confidence closely because it is indicative of how the overall economy is faring. Consumer confidence accounts for two-thirds of the gross domestic product, or GDP.
Other Rasmussen polls: