Consumer Confidence Falls Significantly in February

Consumer confidence fell 12.3 points to 75.0 in February, the lowest level since March 2003. The present situation index fell 13.7 points to 100.6 as consumers grapple with a weaker job market and rising gasoline and food prices. Despite increasing inflation concerns, consumers expectations of inflation were unchanged.

The Present Situation Declines Considerably

- The present situation index, which reflects consumers' assessment of current conditions, slipped to 100.6 from 114.3, the lowest level since November 2004. As a result, consumers' may continue to pull back on discretionary purchases. We expect consumer spending to slow to an annualized pace of one percent in the first quarter.

Weaker Job Market

- Jobs "hard to get" increased to 23.8 from 20.6 while "jobs plentiful" declined 3.2 points suggesting weaker employment growth. January's negative payroll number is likely factoring into the decline. We expect the pace of non-farm payrolls to continue to moderate.
- On a positive note, plans to buy a home increased in February

Wachovia Corporation

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