Declining Expectations Soften Consumer Confidence In December
Consumer confidence slipped slightly at the end of 2019, as The Conference Board’s Consumer Confidence Index decreased marginally in December. The Index now stands at 126.5, down from 126.8 in November.
“Consumer confidence declined marginally in December, following a slight improvement in November,” says Lynn Franco, director of economic indicators at The Conference Board. “While consumers’ assessment of current conditions improved, their expectations declined, driven primarily by a softening in their short-term outlook regarding jobs and financial prospects. While the economy hasn’t shown signs of further weakening, there is little to suggest that growth, and in particular consumer spending, will gain momentum in early 2020.”
Looking closer at The Conference Board’s results, the Present Situation Index—based on consumers’ assessment of current business and labor market conditions—increased from 166.6 to 170. The Expectations Index—based on consumers’ short-term outlook for income, business and labor market conditions—decreased from 100.3 in November to 97.4 in December.
Consumers’ appraisal of current-day conditions improved in December. Those claiming business conditions are “good” remained virtually unchanged at 38.7 percent, while those claiming business conditions are “bad” decreased from 13.6 percent to 11.1 percent. Their assessment of the job market was mixed, however. Those saying jobs are “plentiful” increased from 44 percent to 47 percent but those claiming jobs are “hard to get” also increased from 12.4 percent to 13.1 percent.
Consumers were more upbeat about the short-term outlook. The percentage of consumers expecting business conditions to improve over the next six months increased slightly from 18.6 percent to 18.9 percent, while those expecting business conditions to worsen declined from 11.4 percent to 9.3 percent.
The consumer outlook on the labor market was a mixed bag. Those expecting more jobs in the months ahead decreased from 16.5 percent to 15.3 percent, but those anticipating fewer jobs increased from 13.4 percent to 14.9 percent. Regarding their short-term income prospects, the percentage of consumers expecting an improvement declined from 22.9 percent to 21.1 percent, while the share expecting a decrease rose from 6.2 percent to 7.7 percent.