The Conference Board's Consumer Confidence Index declined sharply in February — dropping nearly 15 points to a score of 64. This is the lowest the index has been since October 1993 when it stood at 60.5. And is much less than the score of 77 that analysts had expected.
"Lackluster job and financial markets, rising fuel costs, and the increasing threat of war and terrorism appear to have taken a toll on consumers," says Lynn Franco, Director of The Conference Board’s Consumer Research Center. "This month’s confidence readings paint a gloomy picture of current economic conditions, with no apparent rebound on the short-term horizon."
According to the report, consumers' assessment of current conditions has turned extremely bleak. In addition, consumers’ expectations for the next six months were also considerably more pessimistic than last month.
For example, the number of consumers who reported that jobs are hard to find rose to a nine-year high of 30.1 percent from 28.9 percent. The number of consumers who anticipate that fewer jobs will become available in the next six months surged to 28.4 percent from 21.2 percent. And, the proportion of consumers who anticipate an increase in their income dropped to 15.2 percent, an all-time low, from 18.4 percent.
Consumer spending and the housing market have been the few bright spots in a lackluster economy the past few months. While the housing market had a record setting month for existing-home sales in January — a seasonally adjusted annual rate of 6.09 million which is an increase of 3 percent over December 2002, these latest numbers suggest that consumer spending may retract. Consumer spending accounts for about two-thirds of economic activity and is therefore watched closely.
The survey by The Conference Board, a not-for-profit research organization, is released on the last Tuesday of every month. It is based on a representative sample of 5,000 U.S. households and compares to a base of 100 in 1985.
So what does that mean to the dairy industry?
Consumer confidence is a significant factor in terms of demand for cheese, say Bob Cropp, dairy economist and professor emeritus at the University of Wisconsin. And with 60 percent of cheese sold in restaurants, and through food-service venues, a drop in consumer confidence does not bode well for demand. Analysts are still looking for something to spark demand.
The Conference Board press release