NEW YORK — Consumers were confident in January, but they may be less so in the months ahead.
The Conference Board on Tuesday said the Consumer Confidence Index improved in January, inching up slightly, to 110.3 from 110 last month. Economists were expecting a reading between 110 and 110.5. The two components of the index were mixed; the Present Situation index rose to 133.9 from 130.5 and the Expectations index dropped to 94.5 from 96.3 last month.
“This month’s slight increase in confidence was solely the result of an improvement in the Present Situation index, fueled primarily by a more favorable job market,” said Lynn Franco, director of the Conference Board Consumer Research Center. “Looking ahead, however, consumers are not as optimistic as they were in December. All in all, the index suggests a moderate improvement in the pace of growth in early 2007.”
The results were similar to those of a survey by RBC Capital Markets, which said on Jan. 12 that “Americans were feeling much more optimistic about their economic future than they were at the close of 2006.” The RBC survey also said while expectations for the economy as a whole improved, expectations for personal finances remained unchanged from December.
The Conference Board’s report said consumers claiming conditions were “good” increased to 28.1 percent from 27.4 percent. Labor conditions also improved, with those saying jobs were “hard to get” declining to 19.7 percent from 21.3 percent. Those claiming jobs were “plentiful” increased to 29.9 percent from 27.6 percent in December.
But the next six months might not be so bright as the Expectations index reflected less optimism than in December. Consumers expecting business conditions to worsen inched up to 8 percent from 7.8 percent. Those who expect business conditions to get better dipped slightly to 16.2 percent from 16.7 percent.
On the labor front, consumers expecting fewer jobs edged up to 15.7 percent from 15.5 percent. The proportion of consumers who think their incomes will increase in the months ahead fell to 19.8 percent from 21.4 percent in December.