Consumer confidence down for second consecutive month

Consumers are feeling better about short-term prospects than current conditions.

The Conference Board’s Consumer Confidence Index declined in December, after falling in November. The Index now stands at 88.6, down from 92.9 in November. 

The Present Situation Index – based on consumers' assessment of current business and labor market conditions – decreased sharply from 105.9 to 90.3.  But the Expectations Index – based on consumers' short-term outlook for income, business, and labor market conditions – increased from 84.3 in November to 87.5 this month.

"Consumers' assessment of current conditions deteriorated sharply in December, as the resurgence of COVID-19 remains a drag on confidence," said Lynn Franco, senior director of economic indicators at The Conference Board. "Overall, it appears that growth has weakened further in Q4, and consumers do not foresee the economy gaining any significant momentum in early 2021."

The monthly Consumer Confidence Survey based on a probability-design random sample, is conducted for The Conference Board by Nielsen. The cutoff date for the preliminary results was Dec. 14.

Consumers' assessment of current conditions declined in December. The percentage of consumers claiming business conditions are "good" decreased from 18.8% to 16.0%, while those claiming business conditions are "bad" increased from 34.9% to 39.5%. 

Consumers' assessment of the labor market was also less favorable. The percentage of consumers saying jobs are "plentiful" declined from 26.3% to 21.8%, while those claiming jobs are "hard to get" rose from 19.4% to 22%.

Consumers, however, were moderately more optimistic about the short-term outlook. The percentage of consumers expecting business conditions will improve over the next six months increased from 26.5% to 29%, while those expecting business conditions will worsen decreased from 22.5% to 21.9%.