Consumer Confidence Declines in December; Inflation Expectations Steady
by:Tom Moeller
|in:Economy in Brief
Summary
- Confidence weakens to lowest level in three months.
- Present situations measure dips, while expectations fall sharply.
- Inflation expectations are unchanged, but interest rate expectations rise.
The Conference Board's Index of Consumer Confidence fell 7.2% (-3.1% y/y) to 104.7 during December following a 2.9% November rise, revised from 1.9%. The level of confidence remains up from a low of 97.5 in April. The Action Economics Forecast Survey expected a reading of 112.8 in December. Consumer confidence has been fluctuating between 97.5 and 114.0 over the past two years.
Both components of the index fell this month. The present situation index eased 0.8% (-4.8% y/y) to 140.2 after rising 3.9% in November to 141.4. The expectations index dropped 13.4% (-1.0% y/y) in December to 81, after rising 2.0% in November.
The percentage of respondents assessing business conditions as “good” fell to 19.1% this month after declining to 21.6% in November. It was the lowest percentage in three months. The percentage assessing conditions as “bad” rose to 16.7% from 15.3% in November. The appraisal of labor market conditions improved in December as 37.0% of respondents thought jobs were plentiful, up from 33.6% in November. Jobs were viewed as hard to get by 14.8% of respondents this month following 15.2% in November. This measure has risen steadily this year from 11.0% in January. The labor market differential calculated by Haver Analytics (the percentage of consumers who think jobs are plentiful minus the percentage who believe that jobs are currently hard to get) rose m/m to 22.2%, but remained below a high of 47.1% in March 2022. This series has a 60% correlation with the unemployment rate over the last ten years.
Expectations for business conditions worsened in December. A lessened 21.7% of respondents expect conditions to improve over the next six months, down from 24.7% in November, while a higher 18.3% expect them to deteriorate, up from 15.9% in November. On employment, 19.1% expect the number of jobs to increase over the next six months versus 22.8% in November. A higher 21.3% respondents expect the number of jobs to decline versus 17.9% in November. A lessened 17.2% expect income to increase in six months versus 20.7% in November. That remained increased from 16.3% in February and compares to 14.3% who expect income to decrease.
The expected rate of price inflation over the next twelve months held at 5.0% in December. It was the lowest since March 2020. Interest rates are expected to rise over the year by 48.5% of respondents, up from 45.5% in November. The percentage of respondents expecting equity prices to increase over the next twelve months fell to 52.9% from 57.2% in November, while the percentage expecting a decline increased to 25.0% from 21.7%.
The percentage of respondents planning to buy a home in December fell to 4.9%, its lowest in four months, from 6.2% in November. Plans to purchase an automobile edged down this month to 11.4% from 13.1% in November.
The Consumer Confidence data are available in Haver’s CBDB database. The total indexes, which are indexed to 1985=100, appear in USECON, and market expectations are in AS1REPNA.
Trends in Work from Home in the U.S.: Insights from Six Datasets from the Federal Reserve Bank of St. Louis is available here.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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