US Consumer Confidence Index Declines in December

On December 23, The Conference Board, a non-partisan, not-for-profit think tank founded in 1916, released its Consumer Confidence Survey for December.

• The Consumer Confidence Index declined 8.1 points to a reading of 104.7 (1985=100).
• The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—fell 1.2 points to 140.2.
• The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—tumbled 12.6 points to 81.1, just above the threshold of 80 that usually signals a recession ahead.

Among age groups, December’s fall in confidence was led by consumers over 35 years old, while consumers under 35 became more confident. Among income groups, the decline was concentrated in consumers with household earnings between $25K and $100K, while consumers at the bottom and top of the income range reported only limited changes in confidence. On a six-month moving average basis, consumers aged under 35 and those earning over $100K remained the most confident.

The cutoff date for the preliminary results was December 16.

In remarks accompanying the report, The Conference Board’s Chief Economist, Dana Peterson, said:

“The recent rebound in consumer confidence was not sustained in December as the Index dropped back to the middle of the range that has prevailed over the past two years. While weaker consumer assessments of the present situation and expectations contributed to the decline, the expectations component saw the sharpest drop. Consumer views of current labor market conditions continued to improve, consistent with recent jobs and unemployment data, but their assessment of business conditions weakened. Compared to last month, consumers in December were substantially less optimistic about future business conditions and incomes. Moreover, pessimism about future employment prospects returned after cautious optimism prevailed in October and November.”