The Conference Board's consumer confidence index declines to 102.9 in February after a downward revision to 106.0 in January. This is the lowest since 101.4 in November 2022. The index is below the consensus of 108.5 in an Econoday survey. While the index for present conditions is up to 152.8 in February from 151.1 in January, the six-month expectations index is down to 69.7 from 76.0. Consumers continue to face concerns about household budgets while inflation persists at the core level and prices for food and energy remain volatile.

While perceptions of the present labor market are good, it is the only one of 5 components to turn in a positive reading. Present business conditions are seen as weaker than last month. There is some improvement in the readings for expected personal income, expected employment, and expected business. However, these remain negative and consistent with a gloomy outlook in the near future.

After falling nearly 2 points in January to 107.1, the consumer confidence index is expected to rebound more than a point to 108.5 in February.

The Conference Board's confidence report surveys consumers on their assessments of the labor market, business activity, and their own financial conditions. The survey is conducted by Toluna, an online community platform. (Conference Board and Toluna)

The pattern in consumer attitudes and spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

This balance was achieved through much of the nineties and, in large part because of this, investors in the stock and bond markets enjoyed huge gains. It was during the late nineties that the consumer confidence index hit its historic peak, reaching levels that were never matched during the subsequent 2001 to 2007 expansion nor during the long expansion following the Great Recession.

Consumer spending accounts for more than two-thirds of the economy, so the markets are always dying to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. With this in mind, it's easy to see how this index of consumer attitudes gives insight to the direction of the economy. Just note that changes in consumer confidence and retail sales don't move in tandem month by month.