Consumer Confidence continues ‘sideways’ movement with slight decline in January

Consumers continued to have decreasing confidence in January, carrying on the decline from December, according to the latest report from the Conference Board.

The Consumer Confidence Index dropped by 5.4 points in January to 104.1. December’s reading was revised to 109.5, a 4.8 increase from the initial report, but that was still 3.3 points less than November.

The Present Situation Index – consumers’ assessment of current business and labor market conditions – saw the steepest drop, falling 9.7 points to 134.3. The Expectation Index – consumers’ short-term outlook on income, labor and business conditions – still sits just above the 80 mark that typically signals a recession ahead. Expectations fell 2.6 points to 83.9.

“Consumer confidence has been moving sideways in a relatively stable, narrow range since 2022. January was no exception,” said Dana M. Peterson, chief economist at The Conference Board. “The Index weakened for a second straight month, but still remained in that range, even if in the lower part. All five components of the Index deteriorated but consumers’ assessments of the present situation experienced the largest decline.

“Notably, views of current labor market conditions fell for the first time since September, while assessments of business conditions weakened for the second month in a row. Meanwhile, consumers were also less optimistic about future business conditions and, to a lesser extent, income. The return of pessimism about future employment prospects seen in December was confirmed in January.”

The report also noted average 12-month inflation expectations increased slightly from 5.1 percent to 5.3 percent, a likely reflection of “stickier inflation” in recent months. Commentary from write-in responses to the survey leaned heavily on references to inflation and high prices.

Here are a few more points from January’s report:

Present Situation

Consumers’ assessments of current business conditions deteriorated in January.

• 18.4 percent of consumers said business conditions were “good,” down from 21.0 percent in December.
• 15.4 percent said business conditions were “bad,” unchanged from December.

Consumers’ appraisals of the labor market plunged in January.

• 33.0 percent of consumers said jobs were “plentiful,” down from 37.1 percent in December.
• 16.8 percent of consumers said jobs were “hard to get,” up from 14.9 percent.

Expectations Six Months Hence

Consumers were less optimistic about the outlook for business conditions in January.

• 20.9 percent of consumers expected business conditions to improve, down from 22.7 percent in December.
• 18.7 percent expected business conditions to worsen, up from 17.3 percent.

Consumers’ assessments of the labor market outlook remained pessimistic.

• 19.4 percent of consumers expected more jobs to be available, down slightly from 19.8 percent in December.
• 20.3 percent anticipated fewer jobs, unchanged from December.

Consumers’ assessments of their income prospects were less optimistic in January.

• 18.3 percent of consumers expected their incomes to increase, down from 19.0 percent in December.
• 11.9 percent expected their incomes to decrease, down from 12.1 percent.

The monthly Consumer Confidence Survey is conducted for the Conference Board by consumer insight company Toluna and is drawn from an online sample of more than 36 million consumers.

See also:

e