Take it with a grain of salt.
US consumer confidence held up reasonably well in February, according to the Conference Board’s gauge, which printed an above-consensus 110.5 on Tuesday (figure below).
The market expected 110. The range of estimates, from 51 economists, was 106.2 to 114.1.
It was the second consecutive monthly decline, and January’s headline print was revised markedly lower. But you could call it a surprisingly strong read considering the circumstances. The present situation gauge actually ticked higher, while expectations fell only slightly.
The report was bland by comparison to the dour readings on University of Michigan sentiment, which suggest Americans’ faith in the economy and policymakers is eroding rapidly in the face of the highest inflation in a generation. The final read on the Michigan index is due Friday.
The color accompanying the Conference Board’s survey was as uninspired as the numbers were bland. “Concerns about inflation rose again in February, after posting back-to-back declines [but] consumers remain relatively confident about short-term growth prospects,” Lynn Franco said, in a press release. The figure (below) is just an updated version of the familiar “stocks versus sentiment” chart.
“While [consumers] do not expect the economy to pick up steam in the near future, they also do not foresee conditions worsening,” Franco went on to say, noting that “confidence and consumer spending will continue to face headwinds from rising prices in the coming months.”
The pedestrian figures wouldn’t have generated a market reaction on a normal day, let alone during a session dominated by “NATO versus Russia” headlines.
Friday’s PCE data will give markets another snapshot of the US consumer. January retail sales surprised markedly to the upside, so any confirmation of consumer resilience might help allay fears of a downturn, even as it stokes concerns of aggressive Fed hikes.
Meanwhile, the Richmond Fed gauge disappointed, printing below the lowest estimate. Suffice to say that’s not a top-tier data point.
I’d mention, in closing, that Case-Shiller beat. The 20-city gauge showed home prices rose 18.6% in the final month of 2021 (figure below).
The national index posted a near 19% YoY increase.
“We have noted that for the past several months, home prices have been rising at a very high, but decelerating rate,” Craig Lazzara, managing director at S&P Dow Jones Indices, said, in a statement. “The deceleration paused in December.”
It’s backward looking, but it doesn’t bode well for inflation.
