United States: Consumer confidence increases in January
The Conference Board’s monthly consumer confidence index rose to 125.4 in January, up from a revised 123.1 in December (previously reported: 122.1). The print was more upbeat than the 123.1 figure anticipated by market analysts and maintains the index comfortably above the 100-point threshold that separates consumer optimism from pessimism.
The uptick in consumer confidence in January was due to increased optimism regarding the jobs market. The labor differential—the difference between the percentage of respondents who state that jobs are plentiful and those who say that jobs are hard to get—widened to 21.2 from 20.3 a month prior. Consumers were also more upbeat regarding the labor market outlook, with only 11.8% expecting fewer jobs in the months ahead in January, markedly down from the 15.9% recorded in the previous month. Meanwhile, the proportion of consumers expecting the job market to improve was unchanged from 19.0% in December.
Consumers were, however, more ambivalent concerning their short-term income prospects in January. Although the proportion of consumers expecting their earnings to worsen declined from the previous month, so did the number of respondents expecting higher income in the near future. The recently passed tax reform might have affected this reading due to consumers’ uncertainty regarding its impact on their own finances.
The healthy reading in consumers’ expectations, which continue to run above average historical levels, indicates that “consumers remain quite confident that the solid pace of growth seen in late 2017 will continue into 2018”, according to Lynn Franco, Director of Economic Indicators at The Conference Board.