January Consumer Confidence Up
The Conference Board, New York, said its Consumer Confidence Index rose for the second straight month, as consumers essentially ignored turmoil on Wall Street and in China.
The Consumer Confidence Index rose to 98.1, up from 96.3 in December. The Present Situation Index was unchanged at 116.4, while the Expectations Index increased from 83.0 to 85.9.
“For now, consumers do not foresee the volatility in financial markets as having a negative impact on the economy,” said Lynn Franco, Director of Economic Indicators with The Conference Board.
“The rise in confidence in January comes despite the recent sell off in the stock market,” said Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C. “The muted reaction to equity markets is consistent with the turmoil last August, when confidence rose to some of the highest levels of the expansion and increased even further the following month.”
More important to consumers, Vitner said, is the gradual improvement in business conditions and the labor market that have helped to boost views on future conditions. “The labor differential closely tracks progress in the unemployment rate,” he said. “Improvement in the labor differential has been slower in recent months, consistent with the more modest pace of decline in the unemployment rate.”
The report said consumers’ appraisal of current conditions was relatively flat in January. The percentage saying business conditions are “good” was virtually unchanged at 27.2 percent, while those saying business conditions are “bad” declined slightly from 18.9 percent to 18.5 percent. Consumers’ assessment of the labor market was modestly more positive. The proportion claiming jobs are “plentiful” decreased from 24.2 percent to 22.8 percent, while those claiming jobs are “hard to get” declined to 23.4 percent from 24.5 percent.
Consumers’ optimism about the short-term outlook improved somewhat in January. The percentage of consumers expecting business conditions to improve over the next six months rose from 14.5 percent to 16.2 percent, while those expecting business conditions to worsen edged down from 10.8 percent to 10.3 percent.
Consumers’ outlook for the labor market was also slightly more optimistic. Those anticipating more jobs in the months ahead increased from 12.4 percent to 13.2 percent, while those anticipating fewer jobs decreased slightly from 16.8 percent to 16.5 percent. The proportion of consumers expecting their incomes to increase improved from 16.3 percent to 18.1 percent. However, the proportion expecting a reduction in income increased from 9.5 percent to 10.8 percent.
Vitner said despite the January increase–which helped to nearly erase the sharp drop registered last November–consumer confidence has deteriorated since late last summer.
