January Consumer Confidence Rebounds
After dropping in December from a 17-year high, The Conference Board, New York, reported its Consumer Confidence Index rebounded in January.
The Index now stands at 125.4, up from 123.1 in December. The Present Situation Index decreased slightly, from 156.5 to 155.3, while the Expectations Index increased from 100.8 last month to 105.5 this month.
“”Consumers’ assessment of current conditions decreased slightly, but remains at historically strong levels,” said Lynn Franco, Director of Economic Indicators with The Conference Board. “Expectations improved, though consumers were somewhat ambivalent about their income prospects over the coming months, perhaps the result of some uncertainty regarding the impact of the tax plan. Overall, however, consumers remain quite confident that the solid pace of growth seen in late 2017 will continue into 2018.”
“The strong job market is certainly a key factor in consumers’ continued confidence,” said Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C. “Some of the largest improvements over the past year have come from a rising share of respondents that believe jobs are plentiful. The labor differential rose to its highest point of the cycle in January. Rising optimism about employment prospects is typically a precursor to more home buying and increased spending for big ticket items.”
The report said consumers’ assessment of current conditions was slightly less positive in December. Consumers’ assessment of business conditions was mixed. The percentage saying business conditions are “good” decreased slightly from 35.8 percent to 34.9 percent, while those saying business conditions are “bad” increased slightly, from 11.7 percent to 12.7 percent. Consumers’ assessment of the labor market was also mixed. The percentage of consumers claiming jobs are “plentiful” increased from 36.3 percent to 37.6 percent, while those claiming jobs are “hard to get” increased marginally, from 16.0 percent to 16.4 percent.
Consumers’ optimism about the short-term outlook improved in January, following a sharp decline in December. The percentage of consumers anticipating business conditions to improve over the next six months increased marginally, from 21.6 percent to 22.0 percent, while those expecting business conditions to worsen increased from 9.0 percent to 9.8 percent.
Consumers’ outlook for the job market was also less negative. The proportion expecting more jobs in the months ahead was virtually unchanged at 19.0 percent, while those anticipating fewer jobs declined from 15.9 percent to 11.8 percent. Regarding their short-term income prospects, the percentage of consumers expecting an improvement decreased from 22.7 percent to 20.4 percent, while the proportion expecting a decrease also declined, from 9.0 percent to 7.7 percent.
