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Consumer confidence ticks down in January amid future concerns

Purchasing plans for autos and appliances held steady in January.

Consumer confidence declined in January as consumers grew more pessimistic about business conditions for the next six months.

The Conference Board Consumer Confidence Index fell to 107.1 in January down from 109.0 in December (an upward revision).  Confidence fell the most for households earning less than $15,000 and for households aged under 35.

Consumers were more upbeat about current business and labor market conditions, with the Present Situation Index rising to 150.9 in January from 147.4 last month.

But they were less positive about the next six months. The Expectations Index — based on consumers’ short-term outlook for income, business, and labor market conditions — fell to 77.8 from 83.4, partially reversing its December gain. (The Expectations Index is below 80 which often signals a recession within the next year, according to The Conference Board.) 

“Consumer confidence declined in January, but it remains above the level seen last July, lowest in 2022,” said Ataman Ozyildirim, senior director, economics at The Conference Board. “

Consumers were less upbeat about the short-term outlook for jobs, and they also expect business conditions to worsen in the near term.  

“Despite that, they expect their incomes to remain relatively stable in the months ahead,” he said.

Purchasing plans for autos and appliances held steady in January,  but fewer consumers are planning to buy a home — new or existing.

“Consumers’ expectations for inflation ticked up slightly from 6.6% to 6.8% over the next 12 months, but inflation expectations are still down from its peak of 7.9% last seen in June,” said Ozyildirim.

Here are highlights from the Conference Board’s report for January.

Present Situation

Consumers’ assessment of current business conditions improved in January.

  • 20.2% of consumers said business conditions were “good,” up from 19.2%.
  • 19.2% said business conditions were “bad,” down from 19.7%.

Consumers’ appraisal of the labor market was also more favorable.

  • 48.2% of consumers said jobs were “plentiful,” up from 46.4%.
  • 11.3% of consumers said jobs were “hard to get,” down from 11.9%.

Expectations Six Months Hence

Consumers became more pessimistic about the short-term business conditions outlook in January.

  • 18.6% of consumers expect business conditions to improve, down from 20.9%.
  • 21.6% expect business conditions to worsen, up from 19.9%.

Consumers were less upbeat about the short-term labor market outlook.

  • 17.9% of consumers expect more jobs to be available, down from 20.0%.
  • 20.1% anticipate fewer jobs, up from 18.7%.

Consumers’ short-term income prospects held steady.

  • 17.2% of consumers expect their incomes to increase, compared to 17.3% last month.
  • 13.4% expect their incomes will decrease, similar to 13.3% last month.

The monthly Consumer Confidence Survey®, based on an online sample, is conducted for The Conference Board by Toluna, a technology company that delivers real-time consumer insights and market research through its innovative technology, expertise, and panel of over 36 million consumers. The cutoff date for the preliminary results was January 24.

Source: January 2023 Consumer Confidence Survey

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