U.S. consumer confidence rose again in February as an accelerating COVID-19 vaccine push provides hope for Americans who have lived through a year of unprecedented restrictions.
The Conference Board reported Tuesday that its consumer confidence index rose to 91.3, up from 88.9 in January.
However, despite the improved vaccination rollout, consumers are more optimistic about current conditions than they are about the near future. The present situation index, which is based on consumers’ assessment of current business and labor market conditions, rose to 92 from 85.5 last month.
But the expectations index — based on consumers’ near-term outlook for income, business, and labor conditions — ticked down slightly to 90.8 this month from 91.2 in January. That’s somewhat surprising to economists as many experts have predicted that widespread vaccinations and warmer weather could make for a summer of relative normalcy.
“One would imagine that the prospect of vaccines being rolled out to all Americans would boost confidence for the future,” said Jennifer Lee, an economist with BMO Capital Markets. “Not the case this month.” Lee noted that she thought consumer confidence would continue to improve in the coming months as more people are vaccinated and businesses fully reopen.
The percentage of consumers who said business conditions are “good” increased from 15.8% to 16.5%, while the proportion claiming business conditions are “bad” fell to 39.9% from 42.4%. Consumers’ views of the labor market also improved.
The percentage of consumers expecting business conditions to improve over the next six months fell to 31% from 34.1%. Those expecting conditions to worsen, however, also declined.
Consumers’ assessment of the job market was also mixed. While fewer of those surveyed said they expected more job opportunities in the coming months, those who thought there would be fewer prospects also declined.
Slightly fewer consumers expect their incomes to increase in the next six months, but fewer see their incomes declining.
The consumer confidence index, which is closely watched by businesses and economists because consumer spending makes up about 70% of U.S. economic activity, had been over 100 for nearly 4 years before the pandemic struck last spring. The metric has mostly languished in the 80s and 90s since then, except for two month this fall.
Average daily COVID-19 deaths and cases have plummeted in the past few weeks. Virus deaths have fallen from more than 4,000 reported on some days in January to an average of fewer than 1,900 per day.
While winter weather has hamstrung vaccination efforts the past couple of weeks, supply is catching up with need and experts expect distribution to accelerate further as the weather improves.