Consumer Confidence Index Improves Slightly, but Expectations Soften

The Conference Board Consumer Confidence Index, which had improved in December, edged up slightly in January. The Index now stands at 110.3 (1985=100), up from 110 in December. The Present Situation Index increased to 133.9 from 130.5. The Expectations Index, however, declined to 94.5 from 96.3 last month.

“This month’s slight increase in confidence was solely the result of an improvement in the Present Situation Index, fueled primarily by a more favorable job market,” says Lynn Franco, Director of The Conference Board Consumer Research Center. “Looking ahead, however, consumers are not as optimistic as they were in December. All in all, the Index suggests a moderate improvement in the pace of growth in early 2007.”

Consumers’ overall assessment of current-day conditions was more upbeat than in December. Those claiming conditions are “good” increased to 28.1 percent from 27.4 percent. Those saying conditions are “bad,” however, rose to 16.5 percent from 14.9 percent. Labor market conditions also improved from last month. Consumers saying jobs are “hard to get” declined to 19.7 percent from 21.3 percent. Those claiming jobs are “plentiful” increased to 29.9 percent from 27.6 percent in December.

Consumers’ outlook for the next six months was less optimistic than in December. Those anticipating business conditions to worsen edged up to 8 percent from 7.8 percent. Those expecting business conditions to get better decreased slightly to 16.2 percent from 16.7 percent.

The outlook for the labor market was mixed. Consumers expecting more jobs to become available in the coming months edged up to 14.0 percent from 13.9 percent, while those anticipating fewer jobs edged up to 15.7 percent from 15.5 percent. The proportion of consumers expecting their incomes to increase in the months ahead declined to 19.8 percent from 21.4 percent in December.

The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The cutoff date for January’s preliminary results was Jan. 23.