CONSUMER CONFIDENCE SLIPS DURING DECEMBER

Byline: Jim Ostroff

WASHINGTON — The Conference Board’s consumer confidence index declined marginally in December, matching consumers’ caution during the critical final weeks of the holiday buying season.
The seasonally adjusted index, which is a rough barometer of consumers’ confidence in the economy and a bellwether of near-term future buying proclivities, dipped 2.9 percentage points in December to 98.7, from 101.6 in November, as measured against a 1985 benchmark of 100.
The board’s November report, which showed consumer confidence rose 5.1 percent from the previous month, was viewed as good news for retailers, holding out the hope of at least a decent Christmas selling season with solid single-digit gains. Although some retailers met or exceeded these sales expectations, analysts said this year’s holiday season sales should average about 2 percent above 1994.
Given an inflation rate of 3.2 percent, this year’s sales increases mean many retailers may post losses in what analysts have called one of the poorest Christmas selling seasons in 25 years.
The board’s index of consumer expectations for the future declined to 91.7 in December from 92.5 in November. However, November’s mark was up substantially from 89.9 in October and just 84.5 in June, the year’s low-point in such expectations. The index measuring consumers’ assessments of the current situation fell to 109.2 this month from 115.3 in November, but was up from the 105.9 in October.
Among the 5,000 households polled for the board’s survey, 22.9 percent said they consider business conditions good, down from 27.7 percent in November and 23.8 percent in October. Significantly, the December results of the business expectations survey were the year’s lowest, save for a 22.4 percent rating in June.
The board’s December survey of expectations for business conditions found 15.9 percent of those polled said they expect conditions to be better in six months, down from 17.8 percent in November. Only June’s results — 15.6 percent of those polled said business conditions would be better in six months — was lower than the December response.
— Fairchild News Service

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