Consumer Confidence Decreases Marginally in December

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Consumer confidence fell in December, following a slight improvement last month. This is the fourth decline in five months.

The Consumer Confidence Index, reported by the Conference Board, slipped 0.3 points from 126.8 to 126.5 in December, as households are less optimistic about future employment and income. The Present Situation Index rose 3.4 points from 166.6 to 170.0, while the Expectation Situation Index dropped 2.9 points from 100.3 to 97.4.

Consumers’ assessment of current business conditions was improved in December. The shares of respondents rating business conditions “good” remained virtually unchanged at 38.7%, while those claiming business conditions “bad” fell by 2.5 percentage point to 11.1%. Meanwhile, consumers’ assessment of the labor market was mixed. Both the share of respondents reporting that jobs were “plentiful” and “hard to get” increased to 47.0% and 13.1% respectively. The gap between these two shares has widened since 2001.

Consumers’ short-term outlook was less positive in December. The share of respondents expecting business conditions to improve rose from 18.6% to 18.9%, while those expecting business conditions to deteriorate decreased from 11.4% to 9.3%. Similarly, expectations of employment over the next six months were less favorable. The share of respondents expecting “more jobs” fell by 1.2 percentage points to 15.3%, the lowest level since January, while those anticipating “fewer jobs” rose by 1.5 percentage points to 14.9%.

Though consumers remain cautious in the volatile global environment, confidence stays at high level, supported by strong labor market, solid wage growth and cooling trade tensions. Both the Consumer Confidence Index and the Expectation Situation Index reached to second highest level in 18 years in July due to a tight labor market and consumers’ expectations of Federal Reserve interest rate cuts.

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 rose to 6% in December. The share of respondents planning to buy a newly constructed home increased to 1.1%, and for those who planning to buy an existing home climbed to 3.4%.



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