United States: Consumer confidence tumbles in December as concerns mount regarding the outlook
The Conference Board’s monthly consumer confidence index fell from a revised 136.4 in November (previously reported: 135.7) to 128.1 in December, badly missing market expectations of 134.0. Despite the decline, the index remained well above the 100-point threshold that separates consumer optimism from pessimism.
Though the present situation index declined somewhat in December, the lower headline print was mostly driven by a very sharp fall—more than 13 points—in the expectations index, signaling waning consumer confidence regarding the economic outlook for the next six months. Importantly, this decline in forward-looking confidence affected all sub-categories: business conditions, short-term income prospects, and labor market prospects.
For each category, the share of survey respondents who expected the situation to improve in the next six months fell compared to November, while the share of respondents expecting it to worsen increased. This was particularly apparent regarding consumers’ labor market outlook. For the first time in months, there were nearly as many respondents expecting fewer jobs in the near future as respondents expecting jobs to be more plentiful, and the difference between the two shrank by over nine points in the month.
Consumers’ perceptions of current conditions also took a hit—albeit a mild one—in December. Particularly, the share of respondents describing business conditions as “good” sharply declined while the share describing them as “bad” slightly increased. On the flipside, 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—rose from 34.2 in November to 34.6 in December, thanks to a lower proportion of pessimistic respondents, although the share of optimistic consumers also declined slightly.
Commenting on December’s results, Lynn Franco, senior director of economic indicators at The Conference Board, noted:
“While consumers are ending 2018 on a strong note, back-to-back declines in Expectations are reflective of an increasing concern that the pace of economic growth will begin moderating in the first half of 2019”.