Consumer confidence slipped in February from its
record-setting January level, an indication that high gas prices
and the Federal Reserve's interest rate increases are beginning to
take a toll on the economy.
The New York-based Conference Board said its Consumer Confidence
Index dipped to 141.8 in February from an all-time high of 144.7 in
January. It was the first decline since last October, but the
reading still remained above December's 141.7.
The results were considerably lower than the 143 that Wall
Street analysts had expected.
"Declining consumers' expectations for the next six months was
the major reason for the overall dip in confidence," said Lynn
Franco, director of the board's research center, in a statement
accompanying the figures. "Consumer attitudes will bear watching
over the next few months to gauge the impact of rising interest
rates and relatively high gas prices."
She added, however, that "As for now, the index is signaling
further economic growth ahead."
The consumer confidence index, based on a monthly survey of some
5,000 U.S. households, is closely watched because consumer spending
makes up about two-thirds of the nation's economic activity.
Most analysts had expected the economy to begin slowing some
this quarter since Fed policy-makers have raised interest rates
four times since June. They also have signaled that further rate
hikes may be needed to slow the economy's torrid growth and head
off a rekindling of inflation.
In addition, rapidly rising crude oil prices have sent heating
oil prices soaring and gasoline costs surging to record levels,
hitting fuel-reliant industries such as airlines and trucking as
well as consumer pocketbooks. Higher spending on fuel diverts funds
that could be used for other purposes.
A clue to the direction of consumer sentiment came Monday when
the Commerce Department reported that American incomes went up
faster than spending in January for the first time since October.
The latest report from the business-financed Conference Board
said 17.6 percent of those surveyed in February expect business
conditions to improve in the next six months, down from 20 percent
the month before. A total of 4.7 percent expect them to worsen, up
from 3.5 percent in January. The rest expected no change.
The reading for employment expectations fell in February to the
lowest level in a year, the report showed.
It said that 15 percent expect employment opportunities to
increase, the lowest reading since 14 percent in February 1999.
Some 9.1 percent expect them to improve. The rest expected no