Bloomberg News

The fact that consumer spending has "held up well" even as consumer confidence has dropped challenges Federal Reserve policymakers trying to judge whether the economy is on the verge of recession, said Fed Vice Chairman Roger Ferguson.

Mr. Ferguson said in remarks prepared for a conference Tuesday that it is "puzzling" that consumer confidence should fall even as spending keeps rising. Earlier Tuesday the Conference Board reported that consumer confidence fell this month to its lowest in four-and-a-half years. It was the fifth consecutive monthly decline in the index.

However, retail sales rose 0.7% last month, the second straight monthly increase.

"Despite the sharp weakening in sentiment, household spending appears thus far to have held up well," Mr. Ferguson said in the text for a speech to a Securities Industry Association conference in New York. "How these apparently conflicting signals will be resolved going forward is not at all apparent from today's vantage point and will bear close scrutiny."

His comments suggested the Fed has yet to conclude that falling confidence justifies an immediate cut in interest rates.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.