Consumer Confidence Index Improves in December

The Conference Board Consumer Confidence Index, which had rebounded in November, improved further in December. The Index now stands at 103.6 (1985=100), up from 98.3 in November. The Present Situation Index surged to 121.5 from 113.2. The Expectations Index increased to 91.6 from 88.4 last month.

“Consumer confidence continues to bounce back and is now at its highest level since Hurricane Katrina struck the Gulf Coast,” says Lynn Franco, director of The Conference Board Consumer Research Center. “The resiliency of the economy, recent declines in prices at the pump, and job growth have consumers feeling more confident at year-end than they felt at the start of 2005. Even though all of the improvement over the past twelve months has been in consumers’ assessment of current conditions, and expectations remain below earlier levels, consumers are confident that the economy will continue to expand in 2006.”

Consumers’ assessment of current-day conditions improved in December. Those claiming business conditions are “bad” decreased to 14.7 percent from 17.9 percent. Those claiming conditions are “good,” however, decreased slightly to 24.3 percent from 25.6 percent. Job market conditions continued to improve. Consumers saying jobs are “hard to get” decreased to 22.2 percent from 23.6 percent, while those claiming jobs are “plentiful” edged up to 23.3 percent from 21.1 percent.

Consumers’ short-term outlook improved moderately in December. Those expecting business conditions to worsen in the next six months decreased to 9.2 percent from 11.5 percent. Consumers expecting business conditions to improve, however, also dipped to 18.1 percent from 19.0 percent.

The outlook for the labor market did not change. Those expecting more jobs to become available in the next six months was virtually unchanged at 14.3 percent versus 14.1 percent a month ago. Those expecting fewer jobs was also virtually unchanged at 18.0 percent versus 18.1 percent in November. The proportion of consumers anticipating their incomes to increase in the months ahead declined to 20.6 percent from 21.3 percent last month.

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 December’s preliminary results was Dec. 20.