Richard Curtin, the director of the University of Michigan’s Surveys, said of the recently released Consumer Confidence Survey, "While consumers are convinced that the economic recovery has begun, they have come to the reluctant conclusion that the pace of economic growth will be slower than they had earlier anticipated."
Curtin explained that for the first time in five months, the February survey did not record greater optimism among consumers about future job prospects. He went on to say, "The initial year of recovery will have more in common with the "jobless recovery" that followed the end of the 1990-91 recession than the more rapid growth in jobs that was typical of prior recoveries."
The Index of Consumer Sentiment was 90.7 in the February survey, down from 93.0 in January, but still well above the recent low of 81.8 in September 2001.
The Index of Consumer Expectations, a closely watched component of the Index of Leading Economic Indicators, fell to 87.2 in February from 91.3 in January, but was still well ahead of the September 2001 low of 73.5. Importantly, though, the Expectations Index was nearly 8% above last February’s survey.
Consumers expected their household income to increase by 3.1% during 2002, up from just 2.6% in the January survey. Home and vehicle buying attitudes improved in the February survey and nearly regained the peak levels recorded late last year. Not all buying attitudes improved, however. Attitudes toward purchases of furniture, appliances, home electronics, and other household durables were less favorable than a year ago.
The report concluded that consumers were more concerned about their high credit card debt, making them somewhat more hesitant to purchase household durables.
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