Consumer Confidence Index Falls in January

The Conference Board Consumer Confidence Index, which had improved moderately in December, gave back the gain in January. The Index now stands at 87.9 (1985=100), down from 90.6 in December. The Expectations Index declined to 69.6 from 75.8. The Present Situation Index, however, increased to 115.3 from 112.9 in December.

“The modest improvement in consumer confidence last month was short-lived. Consumers’ appraisal of current business conditions is becoming more negative and their assessment of the job market, while slightly less negative than in December, is more negative than a year ago,” said Lynn Franco, director of The Conference Board Consumer Research Center. “Looking ahead, consumers are quite downbeat about the short-term future and a greater proportion expect business conditions and employment to deteriorate further in the months ahead. In addition, the percentage of consumers anticipating an improvement in their earnings has declined and could potentially impact spending decisions.”

Consumers’ appraisal of present-day conditions, despite the slight improvement, is less than favorable. Those claiming business conditions are “bad” rose to 20 percent from 18.8 percent, while those claiming business conditions are “good” decreased to 20.7 percent from 21.2 percent. Consumers’ assessment of the job market was slightly more positive. The percentage of consumers saying jobs are “hard to get” eased to 20.1 percent from 22.7 percent, while those claiming jobs are “plentiful” edged up to 23.9 percent from 23.6 percent in December.

Consumers’ short-term outlook, which had improved moderately in December, turned more pessimistic. Those expecting business conditions to worsen over the next six months increased to 16 percent from 14.1 percent, while those anticipating business conditions to improve decreased to 11.6 percent from 13.8 percent. The outlook for the labor market was also less favorable. The percent of consumers expecting fewer jobs in the months ahead rose to 21.5 percent from 19.9 percent, while those anticipating more jobs eased to 10.5 percent from 10.9 percent. The proportion of consumers expecting their incomes to increase declined to 17.6 percent from 20.2 percent.

The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS. The cutoff date for January’s preliminary results was Jan. 21.