By ANNE D'INNOCENZIO
NEW YORK (AP) â¿¿ Consumers' confidence in the economy likely stayed low in February, providing more evidence of the fallout from an increase in Social Security taxes that has left most Americans with less take-home pay this year.
Economists forecast that the Conference Board's confidence index edged up to 60.5 in February, according to a survey by FactSet. That would be up from 58.6 in January, its lowest reading in 14 months and the third straight monthly decline.
The consumer confidence indicator is watched closely because consumer spending, including major purchases like health care, accounts for 70 percent of U.S. economic activity.The Conference Board will release its report Tuesday at 10 a.m. Eastern. The report is based on a survey conducted Feb. 1 to Feb. 14. Despite several brief spikes, the index remains well below the 90 reading that indicates a healthy economy â¿¿ a level it hasn't reached since the recession began in December 2007. Congress and the White House reached a deal on Jan. 1 to prevent income taxes from rising on most Americans. But they allowed a temporary cut in Social Security taxes to expire. For a worker earning $50,000 a year, take-home pay will shrink by about $1,000. Taxes are rising as Americans are grappling with old worries like the sluggish job market. Gas prices are also surging, leaving less money for extras like going out to eat or buying a new dress. .On Monday the national average for gas stood at $3.777 a gallon, down slightly from $3.781 on Friday, according to AAA, the Oil Price Information Service, and Wright Express. The price is still up about 44 cents from a month ago. Analysts are closely watching earnings reports to be issued this week from a variety of retailers including discounter Target Corp., mid-price department store chain J.C. Penney and luxury merchant Saks Inc. for signs on how shoppers are grappling with the new financial pressures. So far, other reports haven't been encouraging. Wal-Mart Stores Inc. and companies like Zale's Corp. and Burger King have said in recent days that their customers have been pulling back because of the income tax hike.