Consumers were more confident in January, reversing the decline in December.
The Conference Board’s Consumer Confidence Index is now at 125.4, up from 123.1 in December. Both components of the index also saw a slight gain. The Present Situation Index, measuring current conditions, rose to 156.5 from 155.3. The Expectations Index, looking at short-term conditions six months out, was up to 105.5 from 100.8 last month.
Lynn Franco, director of economic indicators at The Conference Board, said, “Consumers’ assessment of current conditions decreased slightly but remains at historically strong levels. Expectations improve, though consumers were somewhat ambivalent about their income prospects over the coming months, perhaps the result of some uncertainty regarding the impact of the tax plan.”
Franco concluded that, overall, consumers “remain quite confident that the solid pace of growth seen in late 2017 will continue into 2018.”
James Bohnaker, IHS Markit associate director, U.S. and Consumer Economics, said, “Consumer confidence has been trending up over the past year due to improving job prospects, rising equity values and strengthening home prices. These factors will keep consumer confidence elevated as the economy maintains above-trend growth for the next couple years.”
Consumers’ optimism about the future, or at least six months out, helped with the improved outlook in January. The improvement was centered on the jobs front. Those respondents who said they expected more jobs in the months ahead was virtually unchanged at 19 percent, while those who anticipate fewer jobs fell to 11.8 percent from 15.9 percent.
Separately, those polled who said jobs are “plentiful,” a reflection of current conditions, inched up to 37.6 percent from 36.3 percent in December, while those claiming jobs are “hard to get” rose slightly to 16.4 percent from 16 percent.
According to Bohnaker, the current perception of the labor front is “reflective of a job market that is the strongest it has been in years, with an unemployment rate of 4.1 percent.”