Consumer Confidence at 15-Year High
The Conference Board, New York, said its Consumer Confidence Index finished 2016 on a strong note, rising in December to its highest level since 2001.
The Index rose to 113.7, up from 109.4 in November. The Expectations Index increased sharply from 94.4 to 105.5, but the Present Situation Index decreased from 132.0 last month to 126.1.
“The post-election surge in optimism for the economy, jobs and income prospects, as well as for stock prices which reached a 13-year high, was most pronounced among older consumers,” said Lynn Franco, director of economic indicators with The Conference Board. “Consumers’ assessment of current conditions, which declined, still suggests that economic growth continued through the final months of 2016. Looking ahead to 2017, consumers’ continued optimism will depend on whether or not their expectations are realized.”
“At 113.7, the overall level of consumer confidence is now at a level that has typically only been bested near the peak of previous business cycles,” said Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C. “The one exception was the long, tech-driven expansion of the 1990s, which pushed Consumer Confidence to its all-time high.”
The report said consumers’ assessment of current conditions declined in December. Those saying business conditions are “good” decreased slightly from 29.7 percent to 29.2 percent, while those saying business conditions are “bad” increased from 15.2 percent to 17.3 percent. Consumers’ appraisal of the labor market was less positive than last month. Those stating jobs are “plentiful” declined from 27.8 percent to 26.9 percent, while those claiming jobs are “hard to get” increased from 21.2 percent to 22.5 percent.
Consumers’ short-term outlook improved considerably in December. Those expecting business conditions to improve over the next six months increased from 16.4 percent to 23.6 percent, while those expecting business conditions to worsen declined from 9.9 percent to 8.7 percent.
Consumers’ outlook for the labor market also improved markedly. The proportion expecting more jobs in the months ahead increased from 16.1 to 21.0 percent. However, those anticipating fewer jobs also increased, from 13.5 percent to 14.0 percent. The percentage of consumers expecting their incomes to increase rose from 17.4 percent to 21.0 percent, while the proportion expecting a decrease fell moderately, from 9.2 percent to 8.6 percent.
“The income differential tends to be a fairly good predictor of consumer spending going forward and the most recent rise continues the improving trend that should bode well for consumer spending,” Vitner said.
