Consumer confidence dipped for the second straight month as stubborn inflation and anxiety over a potentially slowing economy weighed on Americans.
The Conference Board reported Tuesday that its consumer confidence index slipped to 102.9 in February, from a reading of 106 in January. The business research group’s present situation index – which measures consumers’ assessment of current business and labor market conditions – ticked up to 152.8 from 151.1 last month.
Ataman Ozyildirim, senior director of economics at the business group, said the drop reflected a sharp decline in confidence among 35- to 54-year-olds with an annual income of at least $35,000. He added that consumers may have started trimming their spending due to high prices and rising interest rates.
The board’s expectations index – a measure of consumers’ six-month outlook for income, business, and labor conditions – tumbled to 69.7 in February from 76 in January. A reading under 80 often signals a recession in the coming year, the Conference Board said.
“Households are likely cautious given inflation is still elevated and borrowing costs are rising,” Rubeela Farooqi, chief U.S. economist with High-Frequency Economics, said in a report. “But they are continuing to spend for now, owing to strong job growth that is restoring incomes.”
Consumers have been a pillar in the U.S. economy, not ready to slow spending even as the Federal Reserve tightens its monetary policy and signals more rate hikes ahead in its effort to cool the economy and bring down persistent, four-decade-high inflation. Those rate increases can raise the cost of using credit cards or taking out a loan for a house, car or other purchases.
Earlier in February, the government reported that retail sales jumped 3% in January following a two-month slide. Americans boosted their spending at stores and restaurants at the fastest pace in nearly two years.
But that confidence could be waning.
The board says consumers appear to be showing early signs of pulling back their spending, particularly on big-ticket items like cars, major appliances, and homes. Plans to take vacations were also dialed back in February.
Earnings reports from major retailers this month have echoed consumer anxiety. While Target, Home Depot, and others largely met Wall Street’s quarterly sales and profit expectations, they have cut their forecasts for 2023 with inflation lingering longer than expected.
“The strong jobs market continues to boost consumers’ spirits, but they see trouble ahead in categories that affect them most: jobs and incomes,” said Robert Frick, an economist with Navy Federal Credit Union. “Confidence is now strongly linked to high inflation, and if inflation falls this year as most forecasts suspect, we could see a commensurate rise in confidence.”
The Fed’s preferred inflation gauge rose last month at its fastest pace since June, an alarming sign that price pressures remain entrenched in the U.S. economy and could lead the Fed to keep raising interest rates well into this year.
Other measures also show persistent inflation. Consumer prices eases in January, yet remained higher than many economists had expected, driven by rising prices for housing, gasoline, and natural gas, according to the Consumer Price Index.
The CPI, which tracks a broad basket of goods and services, rose at a 6.4% annual rate last month, topping forecasts of 6.2%. Core inflation, which excludes volatile food and energy costs, rose in January at an annual rate of 5.6%, also higher than economists had predicted.
Respondents to the Conference Board’s survey continue to express optimism about the stability of their incomes and the broader U.S. job market, which has held up well even as the Fed has ratcheted up its benchmark borrowing rate eight times in the past year.
The unemployment rate fell to 3.4% in January as businesses added a whopping 517,000 jobs in the first month of 2022. There are still nearly two jobs for every unemployed American and despite high-profile layoffs in the tech sector, applications for weekly jobless benefits remain low.
One thing Americans are not in a hurry to do is jumping into the housing market. With an average long-term U.S. mortgage rate of 6.5%, many potential homebuyers have been pushed to the sidelines because those higher rates mean hundreds of dollars a month in extra costs.
The National Association of Realtors reported last week that home sales in January fell for the 12th consecutive month to the slowest pace in more than a dozen years. January’s sales cratered by nearly 37% from a year earlier.
When you’re carrying around a smartphone that’s worth up to $1,000 or more in your pocket, you’re going to want to protect it. But the device isn’t necessarily the most valuable property to thieves – it’s the personal data you have stored on it.
A recent Wall Street Journal report shed light on a new way thieves are hacking into your iPhone to steal your information: your passcode. The report says thieves are now starting to watch as iPhone users enter their numeric or alphanumeric passcodes, memorizing the combination of numbers. Then they steal the users’ phones, log in and change their Apple ID passwords by entering the passcode, locking them out of iCloud.
This gives the thieves time to stop you from accessing vital information and tracking your phone using tools like Find My iPhone. After they gain access to your accounts, they can reset recovery codes to block any attempts of resetting changed passwords. Plus, it poses the risk that they use the passcode to gain access to your financial apps and accounts, enabling them to commit fraud.
An Apple spokesperson told the newspaper that security researchers would agree that iPhones are the “most secure consumer mobile device,” adding that the company is always working on updates to help thwart any “new and emerging threats” to protect customers. Apple said it doesn’t believe the specific tactic referenced in Wall Street Journal report is common but they still take these incidents seriously.
“We sympathize with users who have had this experience and we take all attacks on our users very seriously, no matter how rare,” the spokesperson said. “We will continue to advance the protections to help keep user accounts secure.”
Apple did not immediately respond to CBS News’ request for additional comment on the potential risk.
3 ways to protect yourself from hackers
iPhone users should nevertheless remain vigilant when using their smartphones in a public setting. Apple has released a series of security updates and data protections in recent years, but there are still some other steps you can take to protect your phone and data. Here are a few rules of thumb.
1. Protect your passcode
One of the most obvious ways to prevent a potential thief from accessing your smartphone is to cover your phone screen when entering your passcode — or avoid tapping it in altogether.
Vitaly Shmatikov, a professor of computer science at Cornell University and Cornell Tech, says smartphone users should rely on Touch ID or Face ID as much as possible when out in public.
If you have to use a passcode, then make sure it’s complicated.
“Treat your phone’s passcode as you would a bank card PIN: Make sure it’s long and hard to guess,” Shmatikov told CBS News.
2. Don’t store passwords on your devices
While you may be tempted to store a complicated passcode or password on your phone, desktop, or tablet, try to avoid it. This can make you vulnerable to potential hacks.
“Don’t store passwords to sensitive websites and apps on the phone,” Shmatikov reiterates.
Consider using a password manager – a secure software application that can generate and store sensitive passwords. According to a 2022 Consumer Reports survey, roughly 39% – a 3% increase from 2019 – of consumers use a password manager for their online accounts.
“Since 2019, a large number of individuals have adapted the use of multi-factor authentication versus a stagnant change in individuals who use a password manager or virtual private network,” the survey states, noting that 77% of consumers reported using two-factor authentication in 2022.
3. Set up two-factor authentication
Two-factor authentication, which requires users to enter a backup security code that’s sent to a trusted device or email before entering their password to access a site, is also a valuable tool.
“Two-factor authentication for Apple ID is a must, the second factor should be a separate trusted device (like an iPad, a Mac, or an Apple Watch),” Shmatikov says.
Many experts caution users against using SMS text messages for two-factor authentication, especially if you’re concerned about your phone getting stolen.
SIM swapping, where a criminal hacks into your SIM card and gains access to your phone, is a rising threat. The FBI Phoenix Field Office recently explained how the scam works.
“Criminals first identify a victim who is likely to own large amounts of digital currency and obtain their phone number and mobile carrier,” the agency explained in a news release. “They then socially engineer a customer service representative to port the victim’s phone number to a SIM card and phone in their control.”
If someone has access to your phone, then a backup text won’t help protect your accounts and a criminal can easily change your passwords and backup keys.
“For sites and apps that require two-factor authentication – for example, banking sites – don’t use SMS text as the second factor. Instead, use an authenticator app (like Google Authenticator, Microsoft Authenticator, Duo, Okta Verify, etc.) and turn on biometric protection – require Face ID or Touch ID – in the authenticator app,” Shmatikov advised. “Then a thief who steals your phone won’t be able to get authentication codes and log into financial sites as you.”Source: CBS News