Confidence Stagnates But Recovery Foreseen

The Conference Board's Consumer Confidence Index (CCI) fell by 3.8% between January and February of this year following two straight months of solid improvement. The Present Situation sub-index of the CCI was down 3.4% during February, following a small cumulative increase of 1.9% over the prior three months. Consumer assessment of the current state of the economy had declined by 33.4% between August and November of last year.

On the upside, the Expectations component (defined as six months into the future), which had already begun to show some improvement by November, surged ahead during the final weeks of 2001 and continued to strengthen during the first month of the new year. The Expectations sub-index rose by 19.5% between November and December 2001, and by another 4.9% during January 2002. This run of heightened optimism about the future came to an end during February, however, with a moderate 4.1% decline. This was possibly a healthy sign that Americans remain relatively upbeat about the future but recognize that the economic recovery will take a while to gain momentum. The most recent composite CCI was 13.8% lower than it was during February 2001, but it was still almost 11% higher than the November 2001 low point of 84.9—a bottom that didn't even approach the nadir of 47.3 reached during the nation's last recession 10 years ago.