Economic Update: Consumer Confidence Decline in February | Episode 105 | 02-27-2024

In our latest episode of Markets with Megan, Chief Investment Officer Megan Horneman addresses the decline in consumer confidence, marking its first drop in four months. Megan examines the report's components, emphasizing the deteriorating view on job prospects and expectations for weaker business conditions and individual incomes over the next six months. When talking about inflation expectations, she notes a slight easing but underscores the persistent concern, with a median view of 4.2 percent. Stay tuned this week for upcoming economic data releases, including the University of Michigan consumer confidence survey and the Fed's preferred inflation measure. For any questions or comments, reach out to us at podcast at Verdence dot com.

Watch today's episode here:

Hello, this is Megan Horniman, the Chief Investment Officer for Verdence Capital Advisors. We're coming to you today it's Tuesday, February 27th with our regular segment of Markets with Megan to discuss some of the economic data that we received today. So it wasn't a great morning for economic data, whether you look at some of the regional manufacturing surveys or a pretty disappointing durable goods orders report as well. But what we're going to focus on is the consumer confidence report that came out and unfortunately, consumer confidence is declining. It fell much more than expected for the month of February and it was the first time we've actually seen a decline in consumer confidence in four months.

There's a couple of components within this report that are also released. When you look at the consumer confidence on the present situation or future expectations, both of those also declined. Let's just dig a little bit deeper into some of the things within the report. The decline was led by really a deteriorating view on job prospects those viewing that there were more jobs jobs plentiful than there were hard to get. That's actually sliding, so this is showing us some further cracks in the labor market. There is when you look at expectations from consumers over the next six months, they're expecting a weaker outlook for business conditions as well as their individual incomes. The last thing that we take a close look at also is the inflation expectations from consumers, because inflation expectations can be a vicious circle If you think prices are going to be higher, then you spend more now and then you just create more inflation. Well, we did see a little bit of easing, in that the median view for inflation over the next 12 months fell by 0.1 percent, but it still is at 4.2 percent. So consumers are still very concerned about their finances, their income and inflation over the next year.

We'll continue to watch this. We'll get some more information on the consumer later this week. This is a pretty big week from an economic data standpoint. We'll get the University of Michigan consumer confidence survey the final reading on that that comes out on Friday. But the big one's going to be on Thursday when we're looking at personal income and spending and then the Fed's preferred inflation measure, which is PCE. So we'll be back with some more this week. If you have any questions or comments, please feel free to reach out to podcast at Verdence dot com. Thank you.