U.S. consumer sentiment fell sharply in February as Americans, concerned about sluggish jobs growth, turned cautious about the outlook for the U.S. economy, according to a survey released on Friday.
The University of Michigan’s final reading of consumer sentiment this month fell to 94.4 from January’s final reading of 103.8, which was its highest level in over three years, said market sources who saw the report.
The result, however, was slightly better than market expectations of a fall to 93.5, and slightly higher than February’s preliminary figure of 93.1.
Ken Mayland, president of Clearview Economics LLC, in Pepper Pike, Ohio, said: “I think (the decline) is more grousing over higher energy prices, such as gasoline and home heating bills, and concerns and worries over the weakness in the labor markets, rather than some kind of new reality in the economy.”
Analysts say a lethargic jobs sector has doused consumer confidence despite a strengthening economy. But some economists downplayed the significance of the report, noting it has no correlation with consumers’ actual spending.
Further hurting confidence, analysts say, is the current political campaign, which so far has emphasized the economy’s weak jobs creation.
“One-sided coverage of political dialogue on the economy, which is driven by the Democratic primary process, is likely skewing confidence downward,” Chris Low, economist at FTN Financial, said in a recent report. “After all, this is a debate over why, not whether, the economy is suffering” under President George Bush.
The University of Michigan report, which is released only to paying subscribers, was consistent with the Conference Board’s consumer confidence survey earlier in the week. That index fell more steeply than expected.
The Michigan survey’s current conditions index fell to 103.6 from 109.5 in January, while the consumer expectations index dropped to 88.5 from a final reading of 100.1 last month.
The University of Michigan survey is based on telephone interviews with 500 U.S. households over the course of the month on personal finances and business and buying conditions.
