The February US Household Economic Activity Tracker (HEAT) figures from YouGov show a slight downswing, coinciding with the run-up to sequestration and the associated uncertainty about government spending. The HEAT index is down from 99 in January to 97 in February with job security and perceived business activity levels driving down the Index scores. An Index score above 100 is positive while an index score below 100 indicates negative sentiment.
Expectations of Business Activity Hit 12 Month Low
With sequestration looming at the end of February, American households worried about layoffs. 16% of Americans were concerned that they might lose their job in the next 12 months, up from 14% in January and December. Even high earners were concerned, with 10% of those earning more than $120,000 worried about layoffs in the next twelve months.
One quarter (24%) of employed Americans thought business activity was down in the last month and one in five (19%) expected lower business activity for the next year. This compares to 17% who thought business activity increased in the last month and 24% who expect higher levels of business activity in the next year. The short-term Business Activity Index hit a 24-month low dropping from 99 points (close to neutral) to 93 points in the last month.
Housing
The outlook for home values, although much stronger than in 2011 and early 2012, was still gloomy for most Americans. 27% of all homeowners thought that the value of their home likely fell last month and 3 in 10 (30%) thought that the value of their home would be lower in 12 months. Only 11% thought that their home value increased last month and 24% think their home value will be higher in 12 months.
Government Confidence
Confidence in the Government’s handling of the economy, although still negative, was up slightly from January, despite sequestration, which was looming over us throughout the survey period. 42% were less confident in the government’s handling of the economy compared to 45% in January.
Cash to spend
Although February saw a slight increase in the number of households, which thought it was a good time to make a major purchase (the Index score increased from 83 in January to 84 in February), household finances are still generally negative. A quarter (24%) of households thought that their household finances had worsened in the last month compared to 14% who thought it had improved.
The YouGov Household Economic Activity Tracker is a monthly review of the key indicators of consumer confidence. It provides statistical results from the month reviewed to indicate consumer confidence for the month.
