Consumer Confidence Picks Up
The Conference Board, New York, said its monthly Consumer Confidence Index increased for the second straight month in January.
The Index now stands at 131.6, from an upwardly revised 128.2 in December. The Present Situation Index, based on consumers’ assessment of current business and labor market condition, increased from 170.5 to 175.3. The Expectations Index, based on consumers’ short-term outlook for income, business and labor market conditions, increased from 100.0 last month to 102.5 in January.
Lynn Franco, Senior Director of Economic Indicators with The Conference Board, said January’s increase was driven primarily by a more positive assessment of the current job market and increased optimism about future job prospects. “Optimism about the labor market should continue to support confidence in the short-term and, as a result, consumers will continue driving growth and prevent the economy from slowing in early 2020,” she said.
Tim Quinlan, Senior Economist with Wells Fargo Securities, Charlotte, N.C., said increased optimism about current and expected conditions supported a better than expected print for the consumer confidence index in January, noting the Index reached its highest level since August, when the Trump Administration announced consumer tariffs.
“Consumer spending should remain a key driver of growth this year,” Quinlan said. “Prospects of the de-escalation in the trade war therefore likely buoyed optimism in January.”
The report said consumers’ assessment of current conditions improved in January. Those claiming business conditions are “good” increased from 39.0 percent to 40.8 percent, while those claiming business conditions are “bad” decreased, from 11.0 percent to 10.4 percent. Consumers’ appraisal of the job market also improved. Those saying jobs are “plentiful” increased from 46.5 percent to 49.0 percent, while those claiming jobs are “hard to get” declined, from 13.0 percent to 11.6 percent.
Consumers were also more optimistic about the short-term outlook. The percentage of consumers expecting business conditions will improve over the next six months was virtually unchanged at 18.8 percent, while those expecting business conditions will worsen declined from 8.8 percent to 8.4 percent.
Consumers’ outlook for the labor market was more upbeat. The proportion expecting more jobs in the months ahead increased from 15.5 percent to 17.2 percent, while those anticipating fewer jobs declined from 13.9 percent to 13.4 percent. Regarding their short-term income prospects, the percentage of consumers expecting an improvement declined from 22.7 percent to 22.0 percent, while the proportion expecting a decrease was virtually unchanged at 7.7 percent.