Bloomberg News

NEW YORK - U.S. consumer confidence fell in February for the first time in four months, as higher energy and mortgage costs took the shine off record optimism, the Conference Board reported Tuesday.

The index of consumer confidence fell this month to 141.8 - still the third highest ever - from January's record high of 144.7, the New York-based research group said.

While indexes of current situations and expectations for the next six months also fell, more respondents said they planned to purchase new homes and appliances in coming months. That's good news for growth, but bad news for Federal Reserve officials worried that robust economic growth could reignite inflation.

"We're looking at strong consumption, in excess of 5%, at least through the first half of the year," said Christopher Low, chief economist at First Tennessee Capital Markets in New York. "It puts off the possibility of a slowdown" until at least the third quarter, he said.

A separate report from the National Association of Purchasing Management in Chicago showed Midwest manufacturing grew at a faster pace in February, as more companies reported production gains. The purchasing managers' monthly index rose to 56.7 from 55.6 in January.

"This evidence of a continued recovery in manufacturing fits in with the picture of a broader economy, which shows no sign of slowing," said Vincent Boberski, senior economist with Dain Rauscher Inc., in Minneapolis.

Higher energy and mortgage costs, though, are worrying consumers, the Conference Board suggested. Crude oil futures reached their highest price since 1991 on Feb. 25, closing at $30.35 a barrel.

The average rate this month on a fixed 30-year mortgage was 8.33%, the highest since March 1995 when it was 8.46%, according to Freddie Mac, the No. 2 buyer of U.S. mortgages.

Many stocks have also declined since the first of the year, cutting into consumers' sense of personal wealth. The Dow Jones industrial average has fallen 12% percent in the past two months, and the Standard & Poor's 500 index has fallen 7%.

The Nasdaq composite index has risen almost 15%, but that is less than half the rate it rose in the final two months of 1999.

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