Consumer Confidence Ticks Up 2.2 Points In January

Consumer sentiment lifted in January after slipping in December. The Conference Board’s Consumer Confidence Index now stands at 89.3, up from 87.1 one month earlier. However, its Present Situation Index—based on consumers’ assessment of current business and labor market conditions—decreased from 87.2 to 84.4. The Expectations Index—based on consumers’ short-term outlook for income, business and labor market conditions—increased from 87 in December to 92.5 this month.

“Consumers’ appraisal of present-day conditions weakened further in January, with COVID-19 still the major suppressor,” says Lynn Franco, senior director of economic indicators at The Conference Board. “Consumers’ expectations for the economy and jobs, however, advanced further, suggesting that consumers foresee conditions improving in the not-too-distant future. In addition, the percent of consumers who said they intend to purchase a home in the next six months improved, suggesting that the pace of home sales should remain robust in early 2021.”

Consumers’ appraisal of current conditions weakened further in January. The percentage of consumers saying that business conditions are “good” increased from 15.4 percent to 15.8 percent, but those claiming business conditions are “bad” also increased, from 39.7 percent to 42.8 percent. Consumers’ assessment of the labor market was also less favorable. The share saying jobs are “plentiful” declined from 21 percent to 20.6 percent, while those claiming jobs are “hard to get” rose from 22.9 percent to 23.8 percent.

Consumers, however, have continued to grow more optimistic about the short-term outlook. The percentage expecting business conditions will improve over the next six months increased from 29.5 percent to 33.7 percent, while those expecting business conditions will worsen decreased from 22 percent to 18.1 percent. Consumers’ outlook regarding the job market also improved. The proportion expecting more jobs in the months ahead increased from 28 percent to 31.3 percent, while those anticipating fewer jobs decreased from 22.2 percent to 21.4 percent. Regarding their short-term income prospects, the percentage of consumers expecting an increase declined from 15.7 percent to 14.4 percent, while the share anticipating a decrease also declined from 14.6 percent to 14.2 percent.

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