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Consumer Confidence Weakened in January

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The Conference Board Consumer Confidence Index fell in January, after an increase in December.

According to a release, the Index is now at 113.8 (1985=100), a decrease from 115.2 in December. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—increased to 148.2 from 144.8 last month. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—dropped to 90.8 from 95.4. 

Consumer confidence moderated in January, following gains in the final three months of 2021,” said Lynn Franco, senior director of Economic Indicators at The Conference Board.

“The Present Situation Index improved, suggesting the economy entered the new year on solid footing. However, expectations about short-term growth prospects weakened, pointing to a likely moderation in growth during the first quarter of 2022. Nevertheless, the proportion of consumers planning to purchase homes, automobiles, and major appliances over the next six months all increased.”

“Meanwhile, concerns about inflation declined for the second straight month, but remain elevated after hitting a 13-year high in November 2021. Concerns about the pandemic increased slightly, amid the ongoing Omicron surge. Looking ahead, both confidence and consumer spending may continue to be challenged by rising prices and the ongoing pandemic.”

Present Situation Index suggests that consumers’ appraisal of current business conditions was more favorable in January where 21.1% of consumers said business conditions were “good,” up from 19.4%. Meanwhile, 25.6% of consumers said business conditions were “bad,” down from 27.1%.

Consumers’ assessment of the labor market was mixed, with 55.1% saying jobs were “plentiful,” down from 55.9% (still a historical reading), while 11.3% of consumers said jobs are “hard to get,” down from 11.7%.

As for expectations six months hence, consumers’ optimism about the short-term business conditions outlook dropped in January as 23.8% of consumers expect business conditions will improve, down from 25.4% and 19.0% expect business conditions to worsen, an increase from 18.6%.

Consumers were also less optimistic about the short-term labor market outlook with 22.7% expecting more jobs to be available in the months ahead, down from 24.2%. The other 15.7% anticipate fewer jobs, up from 14.7%.

Consumers were slightly less positive about their short-term financial prospects as 16.7% expect their incomes to increase, down from 17.5% and 12.4% expect their incomes will decrease, up from 11.2%.

The monthly Consumer Confidence Survey, based on an online sample, is conducted for The Conference Board by Toluna, a technology company that delivers real-time consumer insights and market research through its innovative technology, expertise, and panel of over 36 million consumers. The cutoff date for the preliminary results was January 19.

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