Consumer Confidence Slipped In December
Consumer sentiment fell slightly in December, extending a decline that began in November. The Conference Board’s Consumer Confidence Index slipped to 88.6 in December, down from 92.9 in November.
The Conference Board’s Present Situation Index, based on consumers’ assessment of current business and labor market conditions, registered a sharp downward turn from 105.9 to 90.3. However, the Expectations Index, based on consumers’ short-term outlook for income, business and labor market conditions, increased from 84.3 in November to 87.5 for December.
“Consumers’ assessment of current conditions deteriorated sharply in December, as the resurgence of COVID-19 remains a drag on confidence,” says Lynn Franco, senior director of economic indicators at The Conference Board. “As a result, consumers’ vacation intentions, which had notably improved in October, have retreated. On the flip side, as consumers continue to hunker down at home, intentions to purchase appliances have risen. Overall, it appears that growth has weakened further in Q4, and consumers do not foresee the economy gaining any significant momentum in early 2021.”
Reflecting December’s decline in consumer assessment of current conditions, the percentage claiming business conditions are “good” decreased from 18.8 percent to 16 percent, while those claiming business conditions are “bad” increased from 34.9 percent to 39.5 percent. Consumers’ assessment of the labor market was also less favorable. The share of consumers saying jobs are “plentiful” declined from 26.3 percent to 21.8 percent, while those claiming jobs are “hard to get” rose from 19.4 percent to 22 percent.
Consumers, however, were moderately more optimistic about the short-term outlook. The percentage expecting business conditions to improve over the next six months increased from 26.5 percent to 29 percent, while those expecting business conditions to worsen decreased from 22.5 percent to 21.9 percent. Consumers’ outlook regarding the job market also improved. The proportion expecting more jobs in the months ahead increased from 25 percent to 27.5 percent, however those anticipating fewer jobs increased marginally from 21.6 percent to 22.2 percent. Regarding their short-term income prospects, the percentage of consumers expecting an increase rose marginally from 16 percent to 16.8 percent, while the proportion expecting a decrease declined marginally from 14.5 percent to 14.3 percent.