Consumers appear to be spending again, sending The Conference Board’s Consumer Confidence Index to 91.3 in February, up from 88.9 in January.
The two components of the Index were mixed, with the Present Situation Index climbing to 92.0 from 85.5 last month. But the Expectations Index, which measure short-term outlook that’s six months out, slipped to 90.8 from 91.2, based on preliminary results gathered by Feb. 11. One caveat about February’s report is that it didn’t fully capture the impact from recent winter storms, such as the Texas power crisis, nor do the responses reflect the return to indoor dining in New York City.
The February uptick reflects a change in consumer sentiment after three months of consecutive declines. “This course reversal suggests economic growth has not slowed further. While the Expectations Index fell marginally in February, consumers remain cautiously optimistic, on the whole, about the outlook for the coming months,” Lynn Franco, senior director of economic indicators, said. “Notably, vacation intentions—particularly, plans to travel outside the U.S. and via air—saw an uptick this month, and are poised to improve further as vaccination efforts expand.”
Meanwhile, the percentage of consumers who said jobs are “plentiful” rose to 21.9 percent from 20.0 percent. However, looking out six months, the number of respondents who said they expect more jobs ahead fell to 26.1 percent from 30.4 percent.
The Federal Reserve Chairman Jerome Powell on Tuesday told the Senate Banking Committee that an economic rebound still has a ways to go.
“The economic recovery remains uneven and far from complete,” he said, describing the “path ahead” as “highly uncertain.”
Despite progress in the labor market, “millions of Americans remain out of work,” he said.
According to the Bureau of Labor Statistics, the official unemployment rate is 6.3 percent, or about double what it was in February 2020. About 10.1 million Americans are currently unemployed.
Powell said the Fed is committed to its policy range of keeping the target fed funds rate—the rate of interest banks charge each other for short-term loans—in the range of zero to 0.25 precent. He said if there’s downward pressure on that target, the Fed’s arsenal can keep the rate within its policy range.
“That should also limit the extent to which other money market instruments go even lower or perhaps negative,” Powell said.