Consumer Confidence Index Improves

The Conference Board Consumer Confidence Index, which had been declining since the summer, posted a slight increase in December. The Index now stands at 88.6 (1985=100), up from 87.8 in November. The Present Situation Index, however, decreased to 108.3 from 115.7 in November. The Expectations Index rose to 75.5 from 69.1.

“This month’s slight gain in Confidence was due solely to an increase in the Expectations Index,” said Lynn Franco, director of The Conference Board Consumer Research Center. “Consumers’ short-term outlook regarding business conditions, employment, inflation, and stock prices improved marginally. However, while consumers are less negative about the near-term future, they remain far from optimistic. Furthermore, persistent declines in the Present Situation Index indicate the economy is still losing momentum. In fact, in assessing the current job market, pessimists now outnumber optimists. Regarding business conditions, the gap between the two is almost nonexistent.”

“Consumers’ appraisal of present-day conditions continues to paint a dismal picture,” The Conference Board said. Those claiming conditions are “good” decreased to 20.3 percent from 22.5 percent. Those saying conditions are “bad” increased to 20 percent from 18.9 percent. Consumers’ assessment of the job market was also less positive. Those saying jobs are “hard to get” rose to 23.5 percent from 21.4 percent, while those claiming jobs are “plentiful” declined to 22.7 percent from 23.3 percent in November.

“Consumers’ short-term expectations, while reversing a four-month slide, remain at levels that bear watching,” The Conference Board said. Those expecting business conditions to worsen in the next six months decreased to 14.1 percent from 16.6 percent. Those anticipating business conditions to improve increased to 13.8 percent from 12.4 percent.

“The outlook for the labor market was also less pessimistic,” according to The Conference Board. The percent of consumers expecting more jobs in the months ahead inched up to 11.2 percent from 10.6 percent, while those anticipating fewer jobs edged down to 19.9 percent from 22.8 percent. The proportion of consumers expecting their incomes to increase in the months ahead decreased to 19 percent from 19.4 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, a custom research company. The cutoff date for December’s preliminary results was Dec. 18.