Consumer confidence increased in January, rebounding from sluggish December readings. The Conference Board's Consumer Confidence Index was 96.8, up 5.1 points from the revised 91.7 in December. This was just above economists' expectations of 96.0. The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households.
Confidence was up across both portions of the Conference Board index. The Present Conditions index was up by 5.7 points to 80.0 in January. This index measures how consumers perceive the current state of the economy.
The Expectations portion of the index, a measure of future economic activity, increased to 108.1 in January from 103.3 in December.
The University of Michigan's Consumer Sentiment Index, a comparable index, also increased in January, jumping to 103.8 from 92.6 in December and reaching its highest level since November 2000. There were large increases in each of the component indices. The Present Conditions index grew 12.5 points to 109.5 in January, while the Expectations portion improved to 100.1 from 89.8 in December.
Rebounding consumer confidence in January indicates that the December decline was likely a temporary setback in the overall trend of rising confidence. Poor weather conditions over much of the Midwest and Northeast during the survey periods in December may have affected consumer confidence levels.
The January expectations indices show that consumers have a positive outlook for both business and employment conditions in the coming months. Several factors support consumer confidence, including the strong stock market, low interest rates and modest labor market improvements.
Continued improvement in the labor market and overall economic recovery should support growing consumer confidence, although some fluctuations are possible. Since consumer spending accounts for two-thirds of the U.S. economy, consumer confidence is a closely watched economic indicator.
Sources: www.conference-board.com
www.economy.com
