Consumer Confidence Slips

Consumer confidence has taken a hit over the past two months, as Americans absorbed news of dysfunction in Washington and abroad.

The Conference Board said its Consumer Confidence Index decreased in January, following a decline in December. The Index now stands at 120.2 (1985=100), down from 126.6 in December.

According to the Board, The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – declined marginally, from 169.9 to 169.6. The Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – decreased from 97.7 last month to 87.3 this month.

The monthly Consumer Confidence Survey, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch. The cutoff date for the preliminary results was January 17.

“Consumer Confidence declined in January, following a decrease in December,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board.

Franco contined, “The Present Situation Index was virtually unchanged, suggesting economic conditions remain favorable. Expectations, however, declined sharply as financial market volatility and the government shutdown appear to have impacted consumers. Shock events such as government shutdowns (i.e. 2013) tend to have sharp, but temporary, impacts on consumer confidence. Thus, it appears that this month’s decline is more the result of a temporary shock than a precursor to a significant slowdown in the coming months.”

Consumers’ appraisal of current conditions was little changed in January. The percentage of consumers claiming business conditions are “good” was virtually unchanged at 37.4 percent, while those saying business conditions are “bad” decreased from 11.6 percent to 11.1 percent.

However, consumers’ assessment of the labor market was mixed. Those stating jobs are “plentiful” increased from 45.5 percent to 46.6 percent, while those claiming jobs are “hard to get” also increased, from 12.2 percent to 12.9 percent.

Americans will now be reacting to a strong January jobs report from the Labor Department. It seems that some of their fears may have been unfounded, at least for the time being.