While recent economic reports suggest the recovery is sluggish at best, consumer confidence climbed higher in January to reach its best level since August.
The Conference Board’s Consumer Confidence Index jumped 3.2 percentage points to 80.7 this month compared to 77.5 in December. Economists expected the index to come in around 78. The lowest point for the index last year was 58 in January, while the highest point was reached in June, at 82.1. During the Great Recession, the index averaged a dismal 54.
“Consumer confidence advanced in January for the second consecutive month,” Lynn Franco, director of economic indicators at the Conference Board, said. “Consumers’ assessment of the present situation continues to improve, with both business conditions and the job market rated more favorably. Looking ahead six months, consumers expect the economy and their earnings to improve, but were somewhat mixed regarding the outlook for jobs. All in all, confidence appears to be back on track and rising expectations suggest the economy may pick up some momentum in the months ahead.”
In January, the Present Situation Index jumped to 79.1 from 75.3, while the Expectations Index increased to 81.8 from 79. The assessment of people claiming business conditions are “good” climbed higher from 20.2 percent to 21.5 percent. The number of people saying business conditions are “bad” declined to 22.8 percent from 23.2 percent.
The outlook for the job market varied. Those expecting more jobs in the months ahead declined to 15.4 percent from 17.1 percent, but those anticipating fewer jobs decreased to 18.3 percent from 19.4 percent. People saying jobs are “hard to get” decreased slightly, to 32.6 percent from 32.9 percent. The proportion of consumers expecting their incomes to increase improved to 15.8 percent from 13.9 percent, while those anticipating a decrease in their incomes fell to 13.6 percent from 14.3 percent.
It should be noted that not every reading on consumer attitude is showing a positive gain. The Thomson Reuters/University of Michigan’s preliminary reading, which was released earlier this month, showed that consumer sentiment fell to 80.4 in January compared to a reading of 82.5 in December. The results were weaker than estimated.
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