Consumer sentiment has improved this month, building on a step up registered in November. The Conference Board Consumer Confidence Index increased this month to 115.8, up from 111.9 in November.
The Conference Board’s Present Situation Index—based on consumers’ assessment of current business and labor market conditions—was relatively flat, slipping slightly to 144.1 from 144.4 last month. The Expectations Index—based on consumers’ short-term outlook for income, business and labor market conditions—showed an increase, however, climbing to 96.9 from 90.2.
“Consumer confidence improved further in December, following a very modest gain in November,” says Lynn Franco, senior director of economic indicators at The Conference Board. “The Present Situation Index dipped slightly but remains very high, suggesting the economy has maintained its momentum in the final month of 2021. Expectations about short-term growth prospects improved, setting the stage for continued growth in early 2022. The proportion of consumers planning to purchase homes, automobiles, major appliances and vacations over the next six months all increased.”
Franco adds, “Meanwhile, concerns about inflation declined after hitting a 13-year high last month as did concerns about COVID-19, despite reports of continued price increases and the emergence of the Omicron variant. Looking ahead to 2022, both confidence and consumer spending will continue to face headwinds from rising prices and an expected winter surge of the pandemic.”
Consumers’ appraisal of current business conditions are more favorable in December. The Conference Board found that 19.9 percent of them said business conditions were “good,” up from 17.9 percent last month. Also, 26.8 percent of those surveyed said business conditions were “bad,” down from 27.3 percent. Consumers’ assessment of the labor market was moderately less favorable. The survey found that 55.1 percent of consumers said jobs were “plentiful,” down from 55.5 percent—still a historically strong reading—and 12.5 percent of consumers said jobs are “hard to get,” up from 10.8 percent in November.
Looking ahead six months, consumers’ optimism about the short-term business conditions outlook increased in December. The Conference Board reports that 26.7 percent of consumers expect business conditions will improve, up from 25.6 percent in November, while 17.9 percent expect business conditions to worsen, down from 19.6 percent. Consumers were also more optimistic about the short-term labor market outlook, with 25.1 percent expecting more jobs to be available in the months ahead, up from 22.8 percent. Additionally, 14.8 percent anticipate fewer jobs, down from 19 percent last month.
Consumers grew slightly less positive about their short-term financial prospects in December. The survey found that 18 percent of consumers expect their incomes to increase, down from 18.9 percent last month, and 11.5 percent expect their incomes to decrease, down slightly from 11.7 percent.
