by Buying plans for big-ticket items such as autos, homes and appliances also rose as consumers believe interest rates will stabilize
WASHINGTON — Consumer sentiment about the economy and job availability caused consumer confidence to rise nearly 10 points in December, the Conference Board recently reported.
According to the monthly report, consumer confidence rose to 110.7 in December, compared to a downwardly revised 101 in November. Meanwhile, the Present Situation Index, based on consumer assessments of current business and labor market conditions, rose to 148.5, compared to 136.5 in November.
By comparison, the Expectations Index, based on consumers’ short-term outlook for income, business and labor market conditions, rose to 85.6 in December, compared to a downwardly revised rate of 77.4 in November.
Dana Peterson, chief economist at the Conference Board, said that the increase in consumer confidence reflected more positive ratings of current business conditions and job availability along with less pessimistic views of business, labor market and personal income prospects over the next six months.
“While December’s renewed optimism was seen across all ages and household income levels, the gains were largest among households ages 35-54 with income levels of more than $125,000 and above,” Peterson noted.
Peterson added that write-in responses showed that the top issue affecting consumers remains rising prices, while politics, interest rates and global conflicts declined as top concerns. Peterson also added that consumers’ perceived likelihood of a recession over the next 12 months lessened in December to the lowest level this year, although two-thirds of those surveyed still believe a downturn is possible in 2024.
Of their Present Situation, consumers believed business conditions were better in December as:
+ 21.7% said business conditions were good, up from 18.6% in November
+ 16.5% described business conditions as bad, down from 18.9% in November
The assessment of the labor market also was improved in December as:
+ 40.7% of consumers said that jobs were plentiful, up from 38.6% in November
+ 13.2% of consumers said jobs were hard to get, down from 15.6% in November
The Expectations Index showed that consumers were less pessimistic about the short-term business outlook in December as:
+ 18.7% of consumers expect business conditions to improve compared to 17.2% in November
+ 16% expect business conditions to worsen, down from 20.1% in November
Regarding their outlook for the short-term labor market:
+ 17.8% of consumers expect more jobs to be available, up from 16.7% in November.
+ 17.2% anticipate fewer jobs, down from 20.1% in November.
Consumers assessment of their short-term income prospects also improved in December as:
+ 18.7% of those surveyed expect their incomes to improve, compared to 17.7% in November
+ 12.6% expect their income levels to decrease, relatively unchanged from 12.7% in November.
In what could be a positive outlook for housing construction and sales activity, Peterson said that consumer expectations that interest rates will rise in the year ahead declined to their lowest level since January. On a related note, buying plans for autos, homes and big-ticket appliances rose moderately across the board, “ending the year on a slightly more positive note.”
Meanwhile, consumers’ optimistic outlook for stock prices rose to levels not seen since mid-2021, Peterson said, adding that average 12-month inflation expectations continued to recede.
