Consumers aren’t as optimistic as they were last month, and that decline in optimism — particularly over the labor market six months out — helped to drag down the Consumer Confidence Index in January.
The Index now stands at 111.8, down slightly from 113.3 in December. The Conference Board said that while the present situation component rose to 129.7 from 123.5, the expectations portion fell to 99.8 from 106.4. The expectations index looks at consumer sentiment over a short-term outlook, about six months out.
Lynn Franco, director of economic indicators at The Conference Board, said, “Consumer confidence decreased in January, after reaching a 15-year high in December.”
The last time the index was higher was in August 2001, when it stood at 114.
Franco explained that the decline in confidence “was driven solely by a less optimistic outlook for business conditions, jobs and especially consumers’ income prospects. Consumers’ assessment of current conditions, on the other hand, improved in January. Despite the retreat in confidence, consumers remain confident that the economy will continue to expand in the coming months.”
According to the survey results in connection with current conditions, those who said business conditions are “good” inched up to 29.3 percent from 28.6 percent, while those who said business conditions are “bad” dipped to 16.1 percent from 17.8 percent. For current expectations on the jobs front, consumers who said jobs are “plentiful” rose to 27.4 percent from 26 percent, and those who said jobs are “hard to get” fell to 21.5 percent from 22.7 percent.
For the six-month outlook, or short-term expectations, consumers who said they expect business conditions to improve fell to 23.1 percent from 24.7 percent, while those who expect conditions to worsen rose to 10.7 percent from 8.9 percent.
For the expectations component, it was the jobs front — and corresponding expectations on income levels — where consumers were decidedly less confident. The percentage of consumers who expect more jobs in the months ahead fell to 19.8 percent from 21.7 percent, and those who expect fewer jobs was unchanged at 14 percent. Respondents who said they expect their incomes to rise fell to 18 percent from 21 percent, while those who expect their incomes to decrease rose to 9.6 percent from 8.6 percent.
The survey was conducted for The Conference Board by global analytics firm Nielsen. The cutoff date for preliminary results was Jan. 19.