American consumer confidence slipped again in February, a new report from the Conference Board said Tuesday.
The index tracking how Americans are feeling fell to 110.5 this month, a steeper decline than economists had expected and the lowest level since September. The January number was revised down as well.
Inflation continues to weigh on people’s minds – and wallets. Prices keep rising across the nation, particularly when it comes to energy. Gas is a staple for many and it’s driving up household spending. Last week, California residents witnessed a record high of $4.72 per gallon. And experts believe $5 a gallon isn’t out of the question either.
People’s average expectations for inflation for the year ahead rose to 7%, the highest level since November. One key measure of inflation – the consumer price index – rose to 7.5% in the 12-month period ended January, the highest level in nearly 40 years.
House prices jumped nearly 19% last year, the biggest rise in 34 years, new data from the S&P CoreLogic Case-Shiller US National Home Price Index found Tuesday.
Similarly, the pandemic has been a rough time for Americans looking to buy a car. Both used and new car prices have risen sharply amid a shortage of chips that has hampered new models from becoming available.
So far, prices haven’t risen so far that people have stopped spending. But retailers believe we could be approaching that point.
Even though people remain confident that plenty of jobs are available, more than two-thirds of survey respondents don’t expect a change in their income in the next six months.
For now, fewer people plan to spend on homes, cars, major appliances, or a vacation, according to the data. The percentage of people planning a vacation also dropped to just below 40%, with those planning foreign travel at only 10%, adding some bad news for the travel industry.
“Confidence and consumer spending will continue to face headwinds from rising prices in the coming months,” said Lynn Franco, senior director of economic indicators at The Conference Board.
As for the recovery, consumers expect economic growth to moderate in the first half of the year.
“While they do not expect the economy to pick up steam in the near future, they also do not foresee conditions worsening,” said Franco.
All in all, that’s consistent with what other economic data have pointed at: Americans are worried about prices and the present. That’s likely going to hurt economic growth in the first quarter of the year. But the expectations that things will get better in the second half of the year are still alive and well.