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The Latest ANALYTICS Or ig i nat ion It's Not So Bad After All A recent study shows that consumers are feeling generally more positive about the economy and are expressing those feelings in the marketplace, particularly through homeownership. s e r v ic i ng S a na ly t ic s Consumers Begin to Exhale se c on da r y m a r k e t igns of expanding employment lifted the Thomson Reuters/ University of Michigan Index of Consumer Sentiment, according to a release. The index rose to 77.6 in February, a 5.1 percent increase over January and a 3.1 percent increase over February 2012. At the same time, the Current Conditions Index improved 4.7 percent month-over-month to an even 89, while the Index of Consumer Expectations rose 5.4 percent to 70.2. When consumers were asked to describe in their own words what economic developments they had recently heard about, net job gains were reported more frequently in February than any time since May 2012, according to the Survey of Consumers. The improvement in job prospects reflects a slight uptick in prospects for the national economy. "Consumer confidence continued to improve in February due to expected gains in employment. These expected job gains have partially offset spending concerns about higher payroll taxes and the impending reduction in federal spending," said Richard Curtin, chief economist for the Survey of Consumers. "Unfortunately, those expected job gains will be harder to actually accomplish given that the economy faces weakened consumer demand due to lower take-home pay as well as reduced federal spending and employment." Consumers also voiced dissatisfaction about the state of government economic policies, with nearly a quarter of respondents "spontaneously mentioning some negative aspect." Overall confidence in federal economic policies remained near its all-time low, with 15 percent of those surveyed saying they think the Obama administration and Congress are doing a good job. However, confidence in the housing market remains high, with homeowners reporting in February "the most favorable expected annual trends in home values since late 2007." Sales of interest-sensitive goods—such as homes and vehicles—are expected to continue rising in the year ahead, especially among upper-income households. Recent reports are giving consumers reason to believe they have a little room to breathe. A fter taking a hit from January's payroll tax hike, consumer confidence recovered somewhat in February, according to the Conference Board's Consumer Confidence Index. The overall index climbed more than 10 points in February, settling at 69.6 from January's 58.4. "Consumer confidence rebounded in February as the shock effect caused by the fiscal cliff uncertainty and payroll tax cuts appears to have abated," said Lynn Franco, director of economic indicators at the Conference Board. "Consumers' assessment of current business and labor market conditions is more positive than last month. Looking ahead, consumers are cautiously optimistic about the outlook for business and labor market conditions." The Present Situation Index, a measure of consumer sentiment regarding present-day conditions, improved from 56.2 in January to 63.3 in February as respondents expressed greater optimism in the business world. According to the Conference Board, the number of those claiming business conditions are "good" increased 2 percentage points to 18.1 percent, while the number of those stating conditions are "bad" fell from 28.4 percent to 27.8 percent. Consumers' appraisal of the labor market was mixed, however. Those saying jobs are "plentiful" increased to 10.5 percent from 8.5 percent previously, while those claiming jobs are "hard to get" edged up to 37 percent from 36.6 percent. Meanwhile, the Expectations Index—a measure of optimism for the near future—improved nearly 14 points, rising to 73.8. Those expecting business conditions to improve over the next six months increased to 18.9 percent from 15.6 percent previously, while those expecting conditions to deteriorate declined 3.9 percentage points to 16.5 percent. Consumers' outlook for the labor market was also positive. Those anticipating more jobs in the coming months improved to 16.7 percent from 14.4 percent in January, while those expecting fewer jobs decreased to 21.5 percent from 26.7 percent. The proportion of consumers expecting their incomes to increase rose to 15.7 percent, while those anticipating a drop in income fell to 19.6 percent. The M Report | 61