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Consumer confidence takes a December dive

Despite record holiday sales, U.S. consumers are starting to feel less confident about the economy amid trade concerns, market volatility and worries about slowing global economic growth.

The Conference Board’s Consumer Confidence Index took a dive in December, falling to 128.1, down from 136.4 in November. It was the largest monthly decline since July 2015 and the second consecutive month of declines. (In October, the Confidence Index was 137.9, its highest reading since 2000.)

The Present Situation Index – based on how consumers’ assessment current income, business and labor market conditions — declined slightly, from 172.7 in November to 171.6 in December. The Expectations Index – based on consumers' short-term outlook for income, business and labor market conditions – decreased from 112.3 last month to 99.1 this month.

“Expectations regarding job prospects and business conditions weakened [in December], but still suggest that the economy will continue expanding at a solid pace in the short-term,” said Lynn Franco, senior director of economic indicators at The Conference Board. “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.”

Consumers' optimism about the short-term future fell in December. The percentage of consumers expecting business conditions will improve over the next six months decreased from 21.9% to 18.3%. Those expecting business conditions will worsen increased, from 8.3% to 9.7%.

Consumers’ outlook for the labor market was also less favorable. The proportion expecting more jobs in the months ahead decreased from 22.7% to 16.6%, while those anticipating fewer jobs increased, from 11.2% to 14.4%. Regarding their short-term income prospects, the percentage of consumers expecting an improvement declined from 23.2% to 22.4%, while the proportion expecting a decrease rose, from 7.2% to 7.7%.

Regarding current conditions, the percentage of consumers saying business conditions are "good" decreased from 42.0% in November to 37.2% in December, while those claiming business conditions are "bad" increased from 10.7% to 11.3%.
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