MNI INTERVIEW: US Downside Worries Grow - Conference Board
U.S. consumers are becoming increasingly concerned about their employment prospects and stubbornly high prices amid a rise in the cost of staple goods and President Donald Trump's trade policies, Conference Board senior economist Stephanie Guichard told MNI.
"Consumers have become more worried about the labor market, about future business conditions, and to a lesser extent future income," Guichard said in an interview.
The Conference Board’s gauge of confidence plunged 7 points in February to 98.3, the third straight decline and the biggest monthly drop since August 2021. Consumers' expectations six months ahead dropped 9.3 points to 72.9, falling below 80 for the first time since June, a marker that usually signals a recession ahead.
Still, the survey's indicators have been moving sideways in a narrow range above the long-term average for the past two years and the index in this month's report is at the bottom of that range, she said.
"We need to see what happens next month, to see whether this decline is confirmed or whether we're going to be in the same situation we were for the past two years," she said. Right now, "it goes more into the risk section and not in the main forecast."
"The price of key staples for households, like the price of eggs, has really affected consumer confidence in terms of what they think about business conditions, she said, noting survey respondents' diminishing expectations for Fed interest rate cuts. "The Fed is going to wait and see for a few months and we are forecasting our first rate cut in July."
LABOR MARKET WORRIES
While consumer attitudes about the labor market had been brightening in the fourth quarter, they dimmed in January and February. The Conference Board's labor market differential -- the share who see jobs "plentiful" minus those who say they're "hard to get" -- fell to its lowest in four months. The expectation that there will be fewer jobs six months from now surged to its highest level in over a decade.
Guichard, who is responsible for the production and release of the Consumer Confidence Index, indicated respondents still expect income to remain strong.
"People are thinking it's going to be more difficult to look for a job if you have to. However, since they are expecting income to still be favorable, they are not worried about losing their jobs," she said. "If you expect income to remain strong, it means that you worried about the labor market in general, but not the labor market affecting you personally in your current job."
