Consumer confidence hits highest level since 2001

Photo at top: Shoppers in a CVS at 205 N. Michigan Ave. Chicago. (Mengjie Jiang/MEDILL)

By Mengjie(Jessie) Jiang

Consumer confidence in the U.S. climbed to a 15-year high in February amid an optimistic outlook for business and jobs, suggesting that the economy will continue to expand this year.

The headline index soared to 114.8 from a downwardly revised 111.6 in the previous month, the New York-based Conference Board reported Tuesday. The February level was the highest since July 2001 and beat the forecast of 111.3 that economists surveyed by Bloomberg LP had been expecting.

The U.S. consumer confidence reached 114.8 in February, a 15-year high. (Mengjie Jiang/MEDILL)
U.S. consumer confidence reached 114.8 in February, a 15-year high. (Mengjie Jiang/MEDILL)

The board’s index that measures consumers’ present situation increased to 133.4 from 130 in January, while the expectations index advanced to 102.4 from 99.8. The indexes are based on  results collected prior to Feb. 16.

“Consumers rated current business and labor market conditions more favorably this month than in January. Expectations improved regarding the short-term outlook for business, and to a lesser degree jobs and income prospects,” said Lynn Franco, director of economic indicators at the Conference Board. “Overall, consumers expect the economy to continue expanding in the months ahead.”

However, Paul Ashworth, chief U.S. economist at Capital Economics Ltd., stated in a report, “we aren’t convinced that we will necessarily see that sort of acceleration, particularly not with motor vehicle sales slipping back, but it demonstrates that the consumption outlook for the first half of this year is encouraging.”

Consumers saying business conditions will improve over the next six months increased to 24 percent from 22.9 percent, while those expecting business conditions to worsen also rose slightly to 11.1 percent from 10.8 percent.

Shoppers interviewed at random on Chicago’s North Michigan Avenue echoed the survey’s diverse sentiments.

“The future is going to be very bright and the main reason I think we are going to do better as a nation is because we have a good president and he is going to help small business,” said Betty Murphree, a Chicago visitor who runs a lighting and home furnishing store in Florida. “He realizes why small businesses can’t make it with today’s regulations and laws, we have to get government out of our business and lower our taxes and put people back to work and he is going to do that.”

But another Chicago visitor,  Steven Compton, a cardiologist in Alaska, referring to America’s withdrawal from the Trans-Pacific Partnership, said, “as we move away from our multi-level trade agreements, we are going to see prices going up, not just for agricultural items from Mexico and clothing from Asia, life will be more expensive for us, and I don’t think American consumers want to pay more for things,”

Consumers’ assessment of the labor market was mixed. While those describing jobs as “hard to get” decreased to an eight-year low of 20.3 percent from 21.1 percent, the percentage of consumers saying jobs are “plentiful” also dipped, to 26.2 percent from 27.1 percent.

Maria Moore, a 21-year-old administrative assistant in Chicago, is worried her job could be replaced by computers one day. “In my market, a lot of things that I have to do are with typing and answering phone calls, and they are replacing that with phone services, like if you have a doctor appointment, they are going to have a machine call you and remind you of that,” Moore said.

The index also looked at consumer income six months ahead, with 18.3 percent expecting their incomes to rise, up from 18.1 percent.

But higher earnings can be offset by higher living costs, as one shopper pointed out

“I was just on the Metra, and I think that every year the Metra fares go up, increasing 50 cents,” said Cassie Dodd, a freelance fashion designer. “I’m really considering moving somewhere, probably South, where the cost of living is less.”

Photo at top: Shoppers in a CVS at 205 N. Michigan Ave. in Chicago. (Mengjie Jiang/MEDILL)