Amid easing inflation and speculation that the Federal Reserve may lower interest rates in early 2024, consumer confidence climbed to a two-year high during the month of January, The Conference Board reported on Tuesday.
The monthly Consumer Confidence Survey reflects prevailing business conditions and likely developments for the months ahead. It details consumer attitudes, buying intentions, vacation plans, and expectations for inflation, stock prices, and interest rates.
In January, the Consumer Confidence Index rose 6.8 points to 114.8, up from a revised 108.0 in December. The January index reading was the highest since December 2021, and marked the third straight monthly increase.
“January’s increase in consumer confidence likely reflected slower inflation, anticipation of lower interest rates ahead, and generally favorable employment conditions as companies continue to hoard labor,” said Dana Peterson, chief economist at The Conference Board, a nonprofit global business research group.
“The gain was seen across all age groups, but largest for consumers 55 and over,” Peterson said. “Likewise, confidence improved for all incomes groups except the very top; only households earning $125,000+ saw a slight dip.
“January’s write-in responses revealed that consumers remain concerned about rising prices although inflation expectations fell to a three-year low,” she added. “Buying plans dipped in January, but consumers continued to rate their income and personal finances favorably currently and over the next six months.”
Present Situation
Consumers’ assessment of current business conditions was more positive in January.
- 22.5% of consumers said business conditions were “good,” up from 21.1% in December.
- 14.2% said business conditions were “bad,” down from 17.2%.
Consumers’ appraisal of the labor market was also more positive in January.
- 45.5% of consumers said jobs were “plentiful,” up from 40.4% in December.
- 9.8% of consumers said jobs were “hard to get,” down from 13.1%.
Expectations for Next Six Months
Consumers were, on balance, slightly less optimistic about the short-term business conditions outlook in January.
- 16.6% of consumers expect business conditions to improve, down from 18.7% in December.
- However, only 16.0% expect business conditions to worsen, down from 17.8%.
Consumers’ assessment of the short-term labor market outlook was slightly less pessimistic in January.
- 16.0% of consumers expect more jobs to be available, down from 17.6% in December.
- 15.3% anticipate fewer jobs, down from 18.4%.
Consumers’ assessment of their short-term income prospects was, on balance, less pessimistic in January.
- 16.4% of consumers expect their incomes to increase, down from 18.3% in December.
- 11.5% expect their incomes to decrease, down from 13.6%.
For more details, go to The Conference Board’s website here.
