The Conference Board reported Tuesday that its Consumer Confidence Index, dropped to 75.0 (1985=100), down from a downwardly revised 87.3 in January. It was the biggest drop in the index in 15 years, except for a similar drop at the start of the Iraq War in 2003.
The Conference Board said its Expectations Index fell to 57.9 from 69.3 the month before and that its Present Situation Index decreased to 100.6 from 114.3 in January.
"The weakening in consumers' assessment of current conditions, fueled by a combination of less favorable business conditions and a sharp rise in the number of consumers saying jobs are hard to get, suggests that the pace of growth in early 2008 has slowed even further," said Lynn Franco, Director of The Conference Board Consumer Research Center. "Consumers' expectations have also deteriorated significantly and are now at a seventeen-year low [Jan. 1991, 55.3]. With so few consumers expecting conditions to turnaround in the months ahead, the outlook for the economy continues to worsen and the risk of a recession continues to increase."
Among the components of the Present Situation Index, consumers who claim business conditions are "bad" increased to 21.8% from 20.1%, while those claiming business conditions are "good" declined to 18.5% from 20.6%. Their view of the job market sank as well, with 23.8% saying jobs are "hard to get," up from 20.6%, and 20.6% claiming jobs are "plentiful," down from decreased 23.8%.
Among the components of the Expectations Index, consumers who expect business conditions to worsen over the next six months increased sharply to 21.4% from 16.3%; those anticipating business conditions to improve declined to 9.5% from 11.5% in January. Those expecting fewer jobs in the months ahead rose to 27.9% from 21.9%. Only 9% expect jobs to increase, down from 10.5%, and those expecting increases in their income fell to 17% from 18.1%.
The Conference Board indices are based on a monthly survey of 5,000 consumers conducted by TNS.