People walk by the New York Stock Exchange (NYSE) on February 07, 2023 in New York City, the U.S.. /CFP
U.S. consumer confidence is down for the second consecutive month in February, showing that Americans' outlook on the economy tumbled further amid persistently high inflation and looming recession fears.
The Conference Board Consumer Confidence Index dropped to 102.9 in February from 106 in January, according to a report released by the business research group on Tuesday, below a Reuters poll of economists for 108.5.
Source: The Conference Board; NBER
The Conference Board attributed February's decline to growing recession fears.
The board's expectations index, a measure of how consumers feel about the health of the economy in the next six months, fell to a seven-month low of 67.9. Readings below 80 often signal a recession within the next year, according to the report.
"Expectations for where jobs, incomes, and business conditions are headed over the next six months all fell sharply in February," said Ataman Ozyildirim, senior director of economics at The Conference Board.
Ozyildirim also warned that "consumers may be showing early signs of pulling back spending in the face of high prices and rising interest rates."
U.S. inflation picked up speed in January as the Personal Consumption Expenditures (PCE) price index, the Federal Reserve's go-to inflation gauge, rose 5.4 percent from a year earlier, official data showed last Friday. This added fear to the financial market that the Fed could continue raising interest rates.
Currently, annual inflation hovers at 6.4 percent and consumers believe prices will rise by 6.3 percent over the next year, the board said.
"Fewer consumers are planning to purchase homes or autos and they also appear to be scaling back plans to buy major appliances," Ozyildirim added.
Data from National Association of Realtors showed that sales of existing homes have dropped for a record 12 straight months. In the meantime, U.S. home prices fell for the sixth month in a row in December, as rising mortgage rates pushed prospective buyers out of the housing market, S&P CoreLogic Case-Shiller U.S. National Home Price Index showed on Tuesday.
The U.S. financial market shared the same pessimistic sentiment as Wall Street closed out February with major indices declining. For the month, the Dow led losses, sliding 4.19 percent. The S&P 500 and Nasdaq Composite shed 2.61 percent and 1.11 percent, respectively.