Consumer confidence fell off a cliff in February, according to the Conference Board. The index fell 10.5 points to 46 -- the lowest level since February 1983. The Present Situation Index and Expectations Index also experienced huge drops. This is extremely bad news.
So much for that gain last month. As you can see, confidence had been increasing since October through January. But all that progress, and more, was immediately eliminated in February. Lynn Franco, Director of the Conference Board Consumer Research Center says:
Concerns about current business conditions and the job market pushed the Present Situation Index down to its lowest level in 27 years (Feb. 1983, 17.5). Consumers' short-term outlook also took a turn for the worse, with fewer consumers anticipating an improvement in business conditions and the job market over the next six months. Consumers also remain extremely pessimistic about their income prospects. This combination of earnings and job anxieties is likely to continue to curb spending.
It's hard to fathom that consumers felt worse in February than they had throughout the entire recession -- or at any time in the past 27 years! At the very least, I would have thought that future expectations would be better. They're worse.
What happened in February that has Americans so down? I can't think of any prevailing market shock that occurred over this time period. As a result, I suspect it's just the fact that Main Street and average Americans don't feel like things are getting better. And the longer things aren't getting better, the worse people feel. Those who have been unemployed for an extended period may have thought 2010 would be different, but two months in it's still proving difficult to get a job.
As Franco mentions, this is extremely discouraging data for anyone who hoped that consumer spending might pick up. I noted that a recent Gallup poll showed that it was flat in January. This data indicates that it might have declined this month. If consumers continue to feel this awful, they'll continue to spend as little as possible, which is a grim prospect for an economy with a 70% reliance on consumer spending.