Consumers ‘substantially less optimistic’ about future as confidence dips in December
Consumer confidence saw a dip in December back into the middle of the range that has remained prevalent over the past two years.
Consumer confidence saw a dip in December back into the middle of the range that has remained prevalent over the past two years, according to the latest report from the Conference Board, but it’s the outlook on the future that’s drawing concern.
“The recent rebound in consumer confidence was not sustained in December as the Index dropped back to the middle of the range that has prevailed over the past two years,” said Dana M. Peterson, chief economist at the Conference Board. “While weaker consumer assessments of the present situation and expectations contributed to the decline, the expectations component saw the sharpest drop.”
The Consumer Confidence Index for December dropped 8.1 points to 104.7. Consumers’ assessment of current business and labor conditions also dipped, with the Present Situation Index falling 1.2 points to 140.2. Short-term outlooks for those conditions weren’t any better – the Expectations Index took a 12.6-point dive to 81.1, which is just barely above the 80 mark that typically signals a recession ahead.
“Compared to last month, consumers in December were substantially less optimistic about future business conditions and incomes,” Peterson said. “Moreover, pessimism about future employment prospects returned after cautious optimism prevailed in October and November.”
When broken down by age and income, consumers over the age of 35 and concentrated in consumers with household earnings between $25,000 and $100,000 were leading factors in the decline in confidence. Consumers under 35 reportedly became more confident than last month.
Here are some more details from this month’s confidence report:
Present Situation
Consumers’ assessments of current business conditions eroded somewhat in December.
- 19.1 percent of consumers said business conditions were “good,” down from 21.6 percent in November.
- 16.7 percent said business conditions were “bad,” up from 15.3 percent.
Consumers’ appraisals of the labor market improved in December.
- 37.0 percent of consumers said jobs were “plentiful,” up from 33.6 percent in November.
- 14.8 percent of consumers said jobs were “hard to get,” down from 15.2 percent.
Expectations Six Months Hence
Consumers were less optimistic about the outlook for business conditions in December.
- 21.7 percent of consumers expected business conditions to improve, down from 24.7 percent in November.
- 18.3 percent expected business conditions to worsen, up from 15.9 percent.
Consumers’ assessments of the labor market outlook returned to being pessimistic.
- 19.1 percent of consumers expected more jobs to be available, down from 22.8 percent in November.
- 21.3 percent anticipated fewer jobs, up from 17.9 percent.
Consumers’ assessments of their income prospects were less optimistic in December.
- 17.2 percent of consumers expected their incomes to increase, down from 20.7 percent in November.
- 14.3 percent expected their incomes to decrease, up from 12.1 percent in November.
The monthly Consumer Confidence Survey is conducted for the Conference Board by consumer insight company Toluna and is drawn from an online sample of more than 36 million consumers.
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