Consumer Confidence Decreased in January

Consumer confidence decreased in January after reaching a 15-year high in December.

The Consumer Confidence Index, reported by the Conference Board, decreased to 111.8 in January, from a downwardly revised 113.3 in December. The present situation index rose from 123.5 to 129.7 and the expectations index declined from 106.4 to 99.8.

Compared with last month, consumers were quite optimistic about current business conditions. The shares of respondents rating business conditions “good “ and “normal” increased by 0.7 percentage point and 1.0 percentage point, respectively, while the share of respondents reporting business conditions “bad” declined by 1.7 percentage points from 17.8% to 16.1%.

However, expectations of business conditions over the next six months were less favorable. The share of respondents expecting future business conditions to be worse increased from 8.9% to 10.7%, with the net gain coming from the net declines in the share of respondents expecting “better” (1.6 percentage points) and “same” (0.2 percentage point).

Similar to consumers’ assessments of current business conditions, consumers’ assessments of current employment conditions improved. The share of respondents reporting that jobs were “plentiful” increased from 26.0% to 27.4%, while assessments of “job not so plentiful” and “jobs hard to get” decreased.

Unlike expectations of business conditions, expectations of employment over the next six months were somewhat mixed. The share of respondents expecting “more jobs” in the coming six months decreased by 1.9 percentage points from 21.7% to 19.8%, while the share of respondents expecting fewer jobs was virtually unchanged. Moreover, the share of respondents expecting job availability to be the same increased by 2 percentage points, from 64.2% to 66.2%.

The Conference Board also reported the share of respondents planning to buy a home within six months. The share of respondents planning to buy a home decreased from 6.7% in December to 5.2% in January of 2017. Despite the monthly volatility, the trend in the shares of respondents planning to buy a home within six months has been climbing up since the trough.



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