Winter weather weighs on consumer confidence

Severe winter weather weighed on consumer confidence in February, but jobs gains and lower gas prices helped bolster sentiment. 

A measure of consumer sentiment fell to 95.4 this month, still the highest level in eight years, after hitting 98.1 in January — an 11-year high, according to a new University of Michigan report on Friday.

{mosads}Despite the drop, the level is much higher than the 81.6 posted in February 2013.

Consumer optimism was affected by lower gas prices and an unusually harsh winter. 

“It is hard not to attribute the small February decline to the temporary impact of the harsh weather,” said Richard Curtin, chief economist of the surveys.

Declines in the Northeast and Midwest, which have been hardest hit by bad weather, were triple the average loss, while sentiment improved in the South.

Low gas prices had a larger effect on lower-income households, narrowing the difference between low- and high-income pocketbooks, the survey said.

The data indicate that consumer spending will grow at a 3.3 percent rate this year.

“The underlying strength that has kept confidence at high levels has been job gains,” Curtin said. “While buffeted by harsh weather and lower gas prices, consumers have remained focused on gains in jobs and wages.”

But Curtin cautioned that “without more robust wage increases, consumers will increasingly condition their spending on the availability of reduced prices.”

Overall, consumers’ assessment of current economic activity and their expectations for the future both fell.

The current conditions index fell to 106.9 in February from 109.3 but was well above last February’s 95.4.

The expectations index dropped to 88 from 91 in January but was also substantially higher than last February’s reading of 72.7.