(CEP News) - U.S. consumer confidence is expected to remain at stagnant and recessionary levels in February with the release the University of Michigan/Reuters Consumer Confidence Index.

Economists say soaring unemployment, less access to loans, rising gas prices and uncertainty over President Obama’s stimulus plan will keep faith in the U.S. economy at a depressed level.

“A revival in consumer confidence is still some ways out on the horizon,” said economists at IHS Global Insight.

The index is forecast to fall from 61.2 to 60.2 in February. The index is off the all-time low of 55.3 hit in November.

Among the string of bad news expected to weigh on confidence, the month of January saw another 598,000 jobs lost from the U.S. economy - the third month straight of over half a million job losses.

Inconsistently, the U of M index has seen slight improvement over the last two months.

Other indicators haven’t been as inconsistent. The Conference Board’s consumer confidence index hit a record low of 37.7 in January, while the ABC News weekly consumer comfort index currently sits one point higher than its record low.

“The University measure has been somewhat higher than other measures in recent months. So I would expect some sort of downward adjustment,” said Paul Dales, economist with Capital Economics.

Economists at Desjardins also recognized this discrepancy within the U of M index and said it won’t last in February. “The job market’s deterioration, recent jump in gas prices, plethora of bad economic news and political kafuffle surrounding the adoption of the recovery plan point to a drop in confidence in February,” they said.

Gas prices indeed have risen in the first two weeks of February, from an average of $1.838 per gallon the week ending January 26, to $1.926 per gallon the week ending February 9, according to the Energy Information Administration.

“We react to high gas prices like crazy,” said Ellen Zentner, economist with Bank of Tokyo-Mitsubishi.

Zentner said there is also a high amount of uncertainty surrounding President Barack Obama’s multi-billion dollar stimulus plan.

“Consumers honestly don’t know what to think. You’ve got an army of economists out there that strongly disagree with each other on whether the stimulus plan will hurt, help or do nothing,” she said.

One shining light among the dismal data is Thursday’s retail sales report for January, which showed retail sales in the U.S. jumped 1% against expectations for a 0.8% drop.

Dales disregarded the jump as a “blip in an otherwise downward trend¥I would be surprised if retail sales didn’t fall back in February,” he said.

By Megan Ainscow, mainscow@economicnews.ca

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Posted in Categories: Economy, Releases, USA.

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