The Conference Board’s Consumer Confidence Index finished the year as it began — with indications of the public’s continuing anxiety about the economy.
This story first appeared in the December 29, 2010 issue of WWD. Subscribe Today.
The index fell 1.8 points in December to 52.5 from 54.3 in November. The December dip left the measure of the public’s financial well-being and its two components below the sluggish levels at which they began the year.
The index picked up in both October and November, but the year’s final month found consumers more pessimistic about their present day conditions and their expectations for the future.
The Present Situation Index fell to 23.5 from 25.4 last month, and the Expectations Index declined to 71.9 from 73.6. The disappointing 2010 finish contributed to a 0.3 percent slide in retail stocks Tuesday. It also limited the Dow Jones Industrial Average’s increase to 0.2 percent on another light trading day.
In January, the overall index stood at 56.5, with the Present Situation Index at 25.2 and the Expectations Index at 77.3.
Lynn Franco, director of the Consumer Research Center at The Conference Board, said, “Despite this month’s modest decline, consumer confidence is no worse off today than it was a year ago. Consumers’ assessment of the current state of the economy and labor market remains tepid, and their outlook remains cautious. Thus, all signs continue to suggest that the economic expansion will continue well into 2011, but that the pace of growth will remain moderate.”
Chris Christopher, senior principal economist at IHS Global Insight, said the decline, coming after two consecutive monthly increases, was “unexpected, given the good news on the retail sales front.…Today’s report indicates that consumers are still in a fragile state and confidence remains at depressed levels despite strong holiday retail sales, low prices and a relatively robust stock market. The poor housing market performance, high gasoline prices and a lackluster job market are keeping consumers in a tepid mood.”
The anemic condition of the housing market was reinforced Tuesday when the Standard & Poor’s/Case-Shiller index showed a 1.3 percent decline in home prices in October versus September.
Consumers’ assessment of the labor market wasn’t as positive as last month. Those who believe jobs are “plentiful” slipped to 3.9 percent from 4.3 percent, while those who said jobs are “hard to get” inched up to 46.8 percent from 46.3 percent.
In the December survey, in which the cutoff for preliminary results was Dec. 20, those who anticipate fewer jobs in the months ahead rose to 19.5 percent from 19.1 percent last month, while the number of respondents who said they expect more jobs fell to 14.3 percent from 15.1 percent. In addition, those who expect an increase in their incomes declined to 9.9 percent from 11.1 percent in November.
The index peaked at 62.7 in May, when the Present Situation and Expectations indices reached high-water marks of 29.8 and 84.6, respectively. The nadir for all three measures was in February, when the overall index descended to 46.4, the Present Situation Index to 21.7 and the Expectations Index to 62.9.
Feeling the effects of the poor consumer confidence reading as well as the ongoing effects of the East Coast snowstorm, which has limited after-Christmas shopping, the S&P Retail Index fell 1.39 points to 509.09, the latest in a series of four consecutive but small declines dating back to last Wednesday. The Dow was up 20.51 points to 11,575.54.