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Updated: U.S. Consumer Confidence Drops To 78.1 In February

By Kitco News
Tuesday February 25, 2014 10:00 AM

Editor's Note: The article was updated three times, to include comments from the consumer confidence report, comments from CIBC and comments from DailyFX.com.

(Kitco News) - U.S. consumer confidence showed a decline in February, according to the latest data from the Conference Board.

On Tuesday, the board reported its Consumer Confidence Index dropped to a reading of, 78.1 down from January’s revised reading of 79.4, and was lower than economist forecasts. According to media websites, economists were expecting the index to hit a reading between 81 and 79.5.

 “Consumer confidence declined moderately in February, on concern over the short-term outlook for business conditions, jobs, and earnings,” said Lynn Franco, director of economic indicators at The Conference Board.

Andrew Grantham, senior economist from CIBC World Markets, said the index’s volatility makes February’s decline not a very large drop.

The report "suggests consumer sentiment has only been slightly impacted by adverse weather and somewhat weaker hiring figures seen recently,” he said. “Overall, the disappointment in terms of consumer sentiment is probably not large enough to cause much market reaction today.”

Christopher Vecchio, currency analyst at DailyFX.com, said that U.S. consumers are so far “weathering the weather.” He added despite the drop in the headline consumer confidence index, the present situation subcomponent climbed to its highest level in 12-months.

“Considering that Americans feel that their current situation is improving steadily, any drop in consumption data seen from December to February could bounce back once warmer, more amicable spring weather arrives,” he said.

Looking at the report's components, consumers expecting business conditions to improve over the next six months decreased to 16.3% from 17.0%; consumers anticipating business conditions to worsen increased to 13.3% from 12.2%.

The labor market outlook also deteriorated in February as consumers expecting to see more jobs decreased to 13.3% from 15.1%. Consumers anticipating few jobs increased to 20.6% from 19.0%.

The proportion of consumers expecting their incomes to increase also declined, from 16.6% to 15.4%.

Analysts continue to point out that the weather is a dominant factor impacting the country’s economic growth, which is expected to weigh on U.S. consumers.

Michael Gregory, deputy chief economist at BMO Capital Markets, pointed out in a note released before the report that “there is only so much snow, ice and cold a person can take before transforming their smiles into frowns.”

On Feb. 14, the Thomson Reuters/University of Michigan Consumer Sentiment Index showed a flat preliminary reading of 81.2.

By Neils Christensen of Kitco News; nchristensen@kitco.com



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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