After a strong rebound in September, consumer confidence fell for the second consecutive month in December, as job growth continued to slow and more states re-imposed restrictions on business due to resurgence of COVID-19.
The Consumer Confidence Index, reported by the Conference Board, dropped 4.3 points from 92.9 to 88.6 in December, the lowest level since August 2020. The Present Situation Index plunged 15.6 points from 105.9 to 90.3, while the Expectation Situation Index increased 3.2 points from 84.3 to 87.5.
Consumers’ assessment of current business conditions deteriorated in December. The shares of respondents rating business conditions “good” remained fell by 2.8 percentage points to 16.0%, while those claiming business conditions “bad” rose by 4.6 percentage points to 39.5%. Meanwhile, consumers’ assessment of the labor market was also less favorable. The share of respondents reporting that jobs were “plentiful” decreased by 4.5 percentage points, while those saw jobs as “hard to get” increased by 2.6 percentage points.
Consumers, however, were moderately more optimistic about the short-term outlook. The share of respondents expecting business conditions to improve increased from 26.5% to 29%, while those expecting business conditions to deteriorate fell from 22.5% to 21.9%. Similarly, expectations of employment over the next six months improved. The share of respondents expecting “more jobs” rose by 2.5 percentage points to 27.5%, while those anticipating “fewer jobs” marginally increased by 0.6 percentage points to 22.2%.
The Conference Board also reported the share of respondents planning to buy a home within six months. Despite the low mortgage rates, surging home prices and lack of inventory started to harm affordability and hinder ownership opportunity. The share of respondents planning to buy a home fell to 5.2% in December. The share of respondents planning to buy a newly constructed home slightly decreased to 0.9%, and for those who planning to buy an existing home declined to 3.3%.