Consumer confidence dropped in December following a rebound in November. The Conference Board's Consumer Confidence Index was 80.3, down 4.6 points from the revised 84.9 in November. The Index missed economists' expectations of 85.9 and reversed November's gain. The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households.
Confidence fell across both portions of the Conference Board index. Present Conditions, a factor in the total composite index, plummeted to 69.9 from 78.3 in November. This index measures how consumers perceive the current state of the economy.
The Expectations portion of the index, a measure of future economic activity, also decreased. The index score of 89.3 was down 2.1 points from November.
The University of Michigan's Consumer Sentiment Index, a comparable index, actually increased slightly in December to 86.7 from 84.2 in November. Both component indices gained. The Present Conditions portion was up 2.9 points in December to 96.0. The Expectations Index increased to 80.8 from 78.5 in November.
Differences in the results of the two surveys in December may be attributable to the timing and context of each survey. Overall, the confidence indices taken together have made no strong gains in recent months. Consumers remain concerned about the flat job market and the lack of an extension of unemployment benefits, as well as the possibility of war in the Middle East. Rising debt and little pent-up demand remain risks to the outlook for future consumer spending. Positives for consumer confidence continue to be low interest rates and modest growth in income and wages.
Despite the low confidence levels, consumers still seem willing to spend if the prices are right. The buying plans portions of the Conference Board index were steady to positive in December and the Bank of Tokyo-Mitsubishi's Chain Store's Sales Snapshot increased 2.1 percent in the week ending December 28 - the best week-to-week growth in more than seven months. Since consumer spending accounts for two-thirds of the U.S. economy, consumer confidence is closely watched and a critical component for economic recovery.
Sources: www.cnnfn.com
www.conference-board.com
www.economy.com
