Consumers shrugged off the recent stock market volatility and are feeling more confident for the second straight month, according to The Conference Board’s Consumer Confidence Index.
The index increased slightly in January to 98.1, up from 96.3 in December. The gauge of consumer sentient is based off of a survey and is made up of two components, the Present Situation Index, which remained unchanged at 116.4, and the Expectations Index, which rose to 85.9 from 83 last month.
Lynn Franco, director of economic indicators at The Conference Board, said, “Consumers’ assessment of current conditions held steady, while their expectations for the next six months improved moderately. For now, consumers do not foresee the volatility in financial markets as having a negative impact on the economy.”
Consumers’ January assessment of the labor market was moderately more positive than in December. Among the consumers who were surveyed, those who said jobs are “plentiful” fell to 22.8 percent from 24.2 percent. Those who said jobs are “hard to get” also slipped to 23.4 percent from 24.5 percent.
Looking ahead, consumers’ outlook for the labor market was also a bit more optimistic. Those who said expected jobs to be more plentiful six months out rose to 13.2 percent from 12.4 percent. Those who anticipated fewer jobs dipped to 16.5 percent from 16.8 percent.
Also gaining in the outlook six months ahead were consumers’ expectations that business conditions would improve, rising to 16.2 percent from 14.5 percent. Those who said conditions would worsen slipped to 10.3 percent from 10.8 percent.
Further, the proportion of consumers expecting their incomes to rise improved to 18.1 percent from 16.3 percent, but the portion of respondents who expected a reduction in income was also up, to 10.8 percent from 9.5 percent last month.
Chris G. Christopher Jr., director of consumer economics at IHS Global Insight, said there are several things working in consumers’ favor, including lower pump prices, lower household utility bills and relatively positive employment reports. He said while the latest report is “relatively good news and somewhat surprising that consumer expectations increased amidst all the stock market volatility” at the beginning of the month, Christopher also expects that consumer confidence could take a hit in February as the “news on the equity market front starts getting into the consumer psyche more fully.”