Consumer confidence increased in December to the highest level since August 2001. Assessments of current conditions declined but consumers held improved views of the near future.
The Consumer Confidence Index, reported by the Conference Board, hit 113.7 in December, higher than an upwardly revised 109.4 in November. The present situation index declined from 132.0 to 126.1 and the expectations index rose from 94.4 to 105.5.
Compared with last month, consumers were less optimistic about current business conditions. The share of respondents rating business conditions “bad” rose by 2.1 percentage points from 15.2% to 17.3%, with the net gain coming from the net declines in assessments of “good” (0.5 percentage point) and “normal” (1.6 percentage points).
Expectations of business conditions over the next six months improved. The share of respondents expecting better business conditions increased from 16.4% to 23.6%. Most of the 7.2 percentage point net increase (6 percentage points) was the result of a net decline in the share of respondents expecting “same”, while the rest (1.2 percentage points) was the result of a net decline in the share of respondents expecting future business conditions to be worse.
Similar to consumers’ assessments of current business conditions, consumers’ assessments of current employment conditions softened. The share of respondents reporting that jobs were “hard to get” increased from 21.2% to 22.5%, while assessments of “job not so plentiful” and “jobs plentiful” decreased.
Unlike expectations of business conditions, expectations of employment over the next six months were mixed. The share of respondents expecting “more jobs” in the coming six months increased from 16.4% to 21.0% (4.9 percentage points), but the net 5.4 percentage point decline in the share of respondents expecting job availability to be the same was partially offset by a net 0.5 percentage point increase in the share of respondents expecting fewer jobs.
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 to 6.5%, from 6.8% in November.