Consumer confidence improves again in December
Consumer confidence edged up in December as concerns about inflation subsided after hitting a 13-year high in November.
The Conference Board’s Index of Consumer Confidence rose to 115.8 in December, up from a revised 111.9 in November. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions — was relatively flat at 144.1, down from 144.4 last month.
The Expectations Index — based on consumers’ short-term outlook for income, business, and labor market conditions —rose to 96.9 from 90.2. In another positive sign, the proportion of consumers planning to purchase homes, automobiles, major appliances, and vacations during the next six months all increased.
"Consumer confidence improved further in December, following a very modest gain in November,” said Lynn Franco, senior director of economic indicators at The Conference Board. “The Present Situation Index dipped slightly but remains very high, suggesting the economy has maintained its momentum in the final month of 2021.” Expectations about short-term growth prospects improved, setting the stage for continued growth in early 2022.
Franco noted that concerns about inflation declined after hitting a 13-year high last month as did concerns about COVID-19, despite reports of continued price increases and the emergence of the Omicron variant.
“Looking ahead to 2022, both confidence and consumer spending will continue to face headwinds from rising prices and an expected winter surge of the pandemic,” Franco added.
Part of the survey that tracks how consumers feel about current economic conditions fell slightly to 144.1 this month from 144.4 in November.
Other findings from the December report are below.
• Consumers’ appraisal of current business conditions was more favorable in December. Nearly 20% of consumers said business conditions were “good,” up from 17.9% in November, and 26.8% said business conditions were “bad,” down from 27.3%.
• Consumers’ assessment of the current labor market was moderately less favorable as 55.1% of consumers said jobs were “plentiful,” down from 55.5% in November, but still a historically strong reading. And 12.5% of consumers said jobs are “hard to get,” up from 10.8%.
• Consumers’ optimism about the short-term business conditions outlook increased in December — 26.7% expect business conditions will improve, up from 25.6% the previous month. And 17.9% expect business conditions to worsen, down from 19.6%.
• Consumers were also more optimistic about the short-term labor market outlook — 25.1% expect more jobs to be available in the months ahead, up from 22.8%. And 14.8% anticipate fewer jobs, down from 19.0%.