NEW YORK (CNN/Money) -
Job worries sank consumer confidence in the United States in February, the University of Michigan said Friday, but not as far as first estimated.
The university said its preliminary consumer sentiment index for February jumped to a revised 94.4 from 103.8 in January. Economists, on average, expected a reading of 94, compared with an initial reading of 93.1, according to Briefing.com.
The university's current conditions index, which measures the way consumers feel about the present state of the economy, fell to a revised 103.6 from 109.5 in January.
The expectations index, measuring consumer's hopes for the near future, fell to a revised 88.5 from 100.1 in January.
"The sharp and sudden swing in consumer expectations was due to mounting fears among consumers that weak job growth and global job outsourcing may pose a threat to their future living standards," survey director Richard Curtin said in a statement.
The report, along with a stronger-than-expected revision to the government's measure of economic growth in the fourth quarter and a separate report showing strength in Chicago manufacturing, at first lifted U.S. stock prices, but they gave up their gains in midday trading. Treasury bond prices rose.
Wall Street pays close attention to consumers, whose spending makes up more than two-thirds of the total economy. Fueled by tax rebate checks and cash from a wave of mortgage refinancing, consumers hit the malls with gusto in the third quarter, pushing economic growth to the fastest annual pace in nearly 20 years.
But those stimulative effects faded in the fourth quarter, and the pace of consumer spending growth slowed down. On Friday, the Commerce Department said consumption grew at a 2.7 percent annualized pace in the fourth quarter, well below the third quarter's 6.9 percent rate.
In any event, consumers don't always spend the way they feel. Confidence plunged after the terror attacks of Sept. 11, 2001, for example, but consumers still managed to make their way to auto dealers and buy cars at zero-percent financing.
The University of Michigan's February survey found that consumers were slightly less inclined to buy automobiles and household appliances this year, saying auto dealer incentives and appliance prices weren't as attractive as they once were.
But many economists think bigger income-tax refund checks will help consumer spending to stay strong in the first half of 2004, and they hope technology-driven productivity gains of recent years will slow down, which should produce better job growth.
Despite stronger economic growth, businesses have been slow to hire, and non-farm payrolls are still about 2.3 million jobs lower than they were in early 2001, when the last recession began. Slow hiring has helped keep a lid on wage growth, and some economists believe both will have to improve significantly in order to keep consumer spending strong in the second half of 2004.
Job fears hurt other measures of consumer confidence in February, including those of the Conference Board, ABC and Money magazine and Investors Business Daily.
"If the economy produces jobs at a more rapid rate in the months ahead, these apprehensions of consumers could quickly fade," Curtin said.
Next Friday, the Labor Department is scheduled to report on February unemployment and payroll growth. Economists, on average, expect unemployment to hold steady at 5.6 percent and non-farm payrolls to add 135,000 jobs, according to Briefing.com.
Such job growth would be among the best in years, but it would still be slightly below the average monthly growth in the labor force of about 150,000 workers.