December Consumer Confidence Improves

The Conference Board, New York, reported last week its Consumer Confidence Index, which had decreased moderately in November, improved in December.  

The Index now stands at 96.5, up from a revised 92.6 in November (from 90.4). The Present Situation Index increased from 110.9 to 115.3 in December, while the Expectations Index improved to 83.9 from 80.4.  

“Consumers’ assessment of the current state of the economy remains positive, particularly their assessment of the job market,” said Lynn Franco, director of economic indicators with The Conference Board. “Looking ahead to 2016, consumers are expecting little change in both business conditions and the labor market. Expectations regarding their financial outlook are mixed, but the optimists continue to outweigh the pessimists.”  

The report said consumers’ appraisal of current conditions was mixed in December. Those saying business conditions are “good” increased from 25.0 percent to 27.3 percent. However, those saying business conditions are “bad” also increased from 16.9 percent to 19.8 percent. Consumers, however, were more positive about the labor market. The proportion claiming jobs are “plentiful” increased from 21.0 percent to 24.1 percent, while those claiming jobs are “hard to get” decreased to 24.7 percent from 25.8 percent.  

Consumers’ optimism about the short-term outlook was somewhat mixed in December, the report said. Those expecting business conditions to improve over the next six months decreased slightly to 15.2 percent from 15.7 percent. However, those expecting business conditions to worsen increased slightly to 11.0 percent from 10.6 percent.  

Consumers’ outlook for the labor market was more optimistic. Those anticipating more jobs in the months ahead increased slightly to 12.9 percent from 12.0 percent, while those anticipating fewer jobs decreased from 18.5 percent to 16.6 percent. The proportion of consumers expecting their incomes to increase declined from 17.3 percent to 16.3 percent. However, the proportion expecting a reduction in income decreased from 11.8 percent to 9.7 percent.  

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said November’s drop was not as bad as first thought. “Attitudes about the labor market improved notably, but consumers remain disheartened by sluggish income growth,” he said. “The dip in consumer confidence is consistent with our outlook for the economy, which calls for growth to decelerate during the fourth quarter.”