Consumer confidence declined in January on expectations that business conditions and employment will worsen in the coming months, The Conference Board reported today.
The Consumer Confidence Index, which had improved moderately in December after four straight months of weakening, gave back the gain this month and now stands at 87.9, down from 90.6 in December.
“The modest improvement in consumer confidence last month was short-lived. Consumers’ appraisal of current business conditions is becoming more negative and their assessment of the job market, while slightly less negative than in December, is more negative than a year ago,” said Lynn Franco, director of The Conference Board Consumer Research Center. “Looking ahead, consumers are quite downbeat about the short-term future, and a greater proportion expect business conditions and employment to deteriorate further in the months ahead. In addition, the percentage of consumers anticipating an improvement in their earnings has declined and could potentially impact spending decisions.”
Despite a small uptick in the Present Situation Index component, the percentage of consumers surveyed this month who claimed present-day business conditions are “bad” rose to 20 percent from 18.8 percent in December, and those saying conditions are “good” dipped to 20.7 percent from 21.2 percent.
Consumers’ assessment of today’s job market was slightly more positive this month, as fewer (20.1 percent) say jobs are “hard to get,” compared with 22.7 percent in December. Likewise, more consumers believe jobs are “plentiful” now — 23.9 percent compared with 23.6 percent a month ago.
The Expectations Index component took the biggest hit this month, falling to 69.6 from 75.8. Those expecting business conditions to worsen over the next six months increased to 16 percent from 14.1 percent, while those anticipating business conditions to improve decreased to 11.6 percent from 13.8 percent.
The outlook for the labor market was also less favorable, as the percentage of consumers expecting fewer jobs in the months ahead rose to 21.5 percent from 19.9 percent, and those anticipating more jobs eased to 10.5 percent from 10.9 percent. The proportion of consumers expecting their incomes to increase declined to 17.6 percent from 20.2 percent.
The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households.