U.S. Consumer Confidence Strengthens in December

The Conference Board's Index of Consumer Confidence jumped 9.6% (1.6% y/y) this month to 110.7 after rising 1.9% in November to 101.0, revised from 102.0. The latest figure remained well below the high of 137.9 in October 2018 and below the June 2021 high of 128.9. A reading of 103.8 had been expected in the Action Economics Forecast Survey.

The Expectations Index rose 10.6% (2.6% y/y) to 85.6 this month after rising 6.5% in November. It remained up from a most recent low of 70.4 in February but below this year’s high of 88.0 in July. The Present Situations Index improved 8.8% (0.7% y/y) to 148.5 after falling for five consecutive months. The index level reached a high of 155.3 in June.

Twenty-two percent of respondents characterized current business conditions as good in December, up from 18.3% two months earlier, but off a high of 23.4% in June. Recent figures are above their low of 16.3% in July of 2022. Labor market readings also improved this month. The jobs gap, representing the difference between respondents indicating that jobs are plentiful versus those saying jobs are hard to get, rose to 27.5% from 23.0% in November. The reading remained below the March 2022 high of 47.1%. Calculated by Haver Analytics, this series has a 64% correlation with the unemployment rate over the last ten years. The jobs plentiful measure rose to 40.7% from 38.6% but remained down from the March 2022 high of 56.7%. The jobs hard-to-get measure of 13.2% compared to 15.6% in November. The jobs not-so-plentiful reading edged up to 46.1% and stands well above its 30.5% low in September 2021.

Consumers assessment of future business conditions improved as a higher 18.7% of respondents felt that conditions would be better in six months. This is up from a low of 13.2% in May but still below a high of 20.9% in December. A greater 17.8% of respondents felt there would be more jobs in six months, but this remains below 20.0% in December of last year. An increased 18.7% expected income to increase in six months, up from 15.6% in two months ago, but below a high of 19.6% in October of last year.

The expected inflation rate in twelve months of 5.6% compared to 5.7% in November. It remained below the 7.9% high in June of last year, but above the 4.4% low in January 2020.

A greatly lessened 52.4% of respondents felt that interest rates would be higher in twelve months, compared to 59.4% in October. A higher 18.5% thought they would be lower. An increased 37.4% of respondents believed that stock prices would be higher in twelve months, compared to 32.9% in November. A lessened 28.0% thought stock prices would be lower in twelve months versus a high of 44.7% in July of last year. The share of respondents planning to buy a home within six months rose to 5.9% from 5.0% in November, but remained below the October 2022 high of 7.4%. The percentage of respondents planning to buy a major appliance rose to 46.7%, but remained below a high of 52.4% in October 2022.

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.