Consumer confidence up; spending, not so much
New York - Americans seem to be more confident in the economy than they have been in the past few months. But that doesn't mean they're willing to spend more money.
Consumer confidence rebounded in February, reversing three straight months of declines, according to The Conference Board, a private research group. But analysts and economists say that doesn't necessarily mean that they're going to be more likely to open up their pocketbooks and wallets.
"Consumers are feeling better, but they don't feel a whole lot better," says Mark Vitner, an economist at Wells Fargo.
The way Americans feel about the economy has gone through peaks and valleys as they've tried to reconcile improving stock and housing markets with new financial challenges. They've had to deal with a 2 percentage point increase in Social Security taxes that started last month, rising gas price and worries that lawmakers won't resolve a budget impasse in Washington that threatens to trigger automatic $85 billion in spending cuts.
The Conference Board's consumer confidence indicator shows that Americans are feeling a little better about the economy, but they're still skittish. The index is closely watched by economists because consumer spending accounts for 70 percent of U.S. economic activity.
The figure is well below the 90 reading that indicates a healthy economy, but at 69.6 is up from the revised 58.4 in January and the 60.5 analysts polled by research firm FactSet expected. It was the highest reading since November 2012 when the index was at 71.5.
The Conference Board's survey, which was conducted from Feb. 1 through Feb. 14 on a preliminary sample of 2,300 shoppers, shows that Americans are feeling better about the job and income prospects.
The number of people anticipating more jobs rose to 16.7 percent from 14.4 percent, while those expecting fewer jobs declined to 21.5 percent from 26.7 percent.
The proportion of consumers expecting their incomes to increase rose to 15.7 percent from 13.5 percent, while those anticipating a decrease fell to 19.6 percent from 23.3 percent.
The more positive outlook comes amid a mix of good and bad economic news.
Some major retailers reported that sales last month rose higher-than-expected. But a string of big stores, including Wal-Mart Stores Inc. to Zales Corp. have signaled that shoppers already have been pulling back in recent weeks because of payroll tax increase.
At the same time, the stock market is still rallying. And the job market, while still tough, is rebounding. In January, employers added 157,000 jobs. And annual revisions included in the Labor Department's January employment report showed the economy added 600,000 more jobs in 2011 and 2012 than previously thought. But the unemployment rate rose to 7.9 percent in January from 7.8 percent in December.
Whether or not Americans will spend remains to be seen. Many economists think consumer spending has slowed in response to higher tax burdens but will rebound later in the year. But they also worry that the budget fights in Washington will persist for much of 2013 and drag on economic growth.
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