January Consumer Confidence Slips

The Conference Board, New York, said its Consumer Confidence Index fell slightly in January after hitting a 15-year high in December.

The Index fell to 111.8, down from 113.3 in December. The Present Situation Index increased from 123.5 to 129.7, but the Expectations Index decreased from 106.4 last month to 99.8.

“The decline in confidence was driven solely by a less optimistic outlook for business conditions, jobs, and especially consumers’ income prospects,” said Lynn Franco, Director of Economic Indicators with The Conference Board. “Consumers’ assessment of current conditions, on the other hand, improved in January. Despite the retreat in confidence, consumers remain confident that the economy will continue to expand in the coming months.”

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., noted the entire decline was due to a slight pull back in optimism for the outlook for the next six months.

Consumers’ appraisal of current conditions improved in January. Those saying business conditions are “good” increased slightly from 28.6 percent to 29.3 percent, while those saying business conditions are “bad” decreased from 17.8 percent to 16.1 percent. Consumers’ assessment of the labor market was also more positive than last month. The percentage of consumers stating jobs are “plentiful” rose from 26.0 percent to 27.4 percent, while those claiming jobs are “hard to get” decreased from 22.7 percent to 21.5 percent.

Consumers’ short-term outlook, which had increased considerably last month, declined in January. The percentage of consumers expecting business conditions to improve over the next six months decreased from 24.7 percent to 23.1 percent, while those expecting business conditions to worsen increased from 8.9 percent to 10.7 percent.

Consumers’ outlook for the labor market was somewhat mixed. The proportion expecting more jobs in the months ahead decreased from 21.7 percent to 19.8 percent, while those anticipating fewer jobs was virtually unchanged at 14.0 percent. The percentage of consumers expecting their incomes to increase declined from 21.5 percent to 18.0 percent, while the proportion expecting a decrease rose from 8.6 percent to 9.6 percent.